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This article is the introductory chapter of the book A Research Agenda for Financial Inclusion and Microfinance, edited by Marek Hudon, Marc Labie and Ariane Szafarz, and forthcoming in 2019 with Elgar Research Publishing. This introductive article written by the editors explains how research in microfinance and financial inclusion evolved together with field practices. It identifies the four periods in the life of the microfinance sector that match four steps in research development: genesis, childhood, adolescence, and maturity. The article discusses whether this evolution could lead to a decline. Finally, it presents the monograph, which is organized along thematic groups of chapters. The titles of the four parts of the book are: “Framing research on microfinance and financial inclusion,” “Social, environmental and financial performance,” “Targets for financial inclusion,” and “Institutional and technological design.” Each chapter is written by scholars whose expertise on financial inclusion and microfinance is recognized internationally., info:eu-repo/semantics/published

Much has been learnt in microfinance over the last ten years. But there is yet so much to discover on how to improve financial inclusion and development. This paper offers an—evidently subjective—microfinance alphabet, hoping to so provide the microfinance scientific community with an opportunity to “read together” both where we stand and where we are heading., info:eu-repo/semantics/published

We study mission drift in social enterprises by examining whether these organizations stick to the actual mission enshrined in their mission statements. We use data from microfinance organizations (MFOs), a homogeneous group of social enterprises which have been scrutinized—and sometimes criticized—for mission drift. We focus on three publicly recognized and non-mutually-exclusive microfinance social missions identified by previous studies: poverty alleviation, women's empowerment, and rural financial inclusion. Based on hand-collected data from 199 MFOs worldwide, our results suggest strong coherence between social missions and actual practices. Hence, we argue that, with respect to MFOs’ own stated social missions, mission drift is no serious concern. The trustworthiness of social mission statements makes them suitable evaluation tools for social enterprises., info:eu-repo/semantics/published

This paper investigates whether product market power affects trade credit decisions. We exploit the 2007-08 credit crisis in the U.S. as a source of variation in the importance of product market power for trade credit. We find that a one standard deviation increase in market power is associated to a decrease in payables of approximately four days during the crisis, showing that high market power firms alleviate financial constraints from their suppliers to avoid the loss of monopoly rents. Our inferences are robust to structural and non-structural measures of market power, both at the firm and at the industry levels, and the inclusion of controls to address potential confounding effects deriving from other firm features, including financial constraints, industry specific shocks and macroeconomic effects., info:eu-repo/semantics/published

The commons are alternative social and economic practices for fostering community development and regeneration. While the role of finance is increasingly criticized as a trigger for individualism, community currencies (CCs) are one of the financial initiatives that aim to reorganize finance in the collective interest. We analyze to what extent these alternative systems allow finance to constitute common goods, or ‘commons’. To this end, we investigate the commoning practices through which resources are created, distributed and consumed in a way that promotes new collectives. We analyze the extent to which CCs can be considered as commons. Our findings suggest that, although these monetary services are privately used and consumed, they have strong collective attributes such as community-building as well as the insertion of solidarity and cooperative values in money. Finally, we inquire into the limits and ambiguities of these alternatives relative to the capitalist system., info:eu-repo/semantics/published

La littérature académique en gouvernance d’entreprise étudie en particulier la séparation entre propriété et contrôle au sein de l’actionnariat des entreprises privées. Cet article propose une synthèse critique et des illustrations internationales des résultats les plus récents en la matière. En particulier, il détaille les mécanismes permettant aux actionnaires dominants d’accroître leur contrôle d’une société, parmi lesquels : les structures pyramidales, les participations croisées et les actions à droits de vote multiples, qui offrent la possibilité de découpler le contrôle de la part effectivement détenue dans le capital de l’entreprise. Ces phénomènes, plus ou moins présents dans les différentes régions du monde, jouent un rôle fondamental puisqu’ils contribuent à l’accroissement des asymétries entre actionnaires d’une même entreprise et engendrent des opportunités de bénéfices privés en faveur de certains d’entre eux. Leur impact s’étend bien au-delà de la sphère de l’entreprise concernée et peut affecter le fonctionnement même des marchés financiers. La quantification du niveau de contrôle au sein d’un empire industriel peut être obtenue à l’aide de diverses méthodes. Les développements récents en la matière sont résumés et l’application à des cas internationaux réels est discutée., The academic literature on corporate governance has taken a particular interest in the separation of property and control within bodies of corporate shareholders. This article provides a critical synthesis and international examples of the most recent results in this area. More particularly, it outlines the mechanisms through which controlling shareholders increase their control over a corporation (including pyramid structures), cross-shareholding, and shares with multiple voting rights. All of these mechanisms potentially provide the means of divorcing control from the proportion of corporate capital stock effectively held. These phenomena, present to a lesser or greater degree across the planet, play a fundamental role as they increasingly skew the relationship among shareholders of the same corporation while also creating opportunities for private benefits for some. Their impact extends well beyond the sphere of the corporation itself and may even affect the operation of financial markets. There are several ways of quantifying the level of control within an industrial empire. Recent developments in this field are summarized, and their application to true international cases is discussed.

How does inflation affect the investment decisions of financially constrained firms in the presence of corporate taxation? Inflation interacts with corporate taxation via the deductibility of i) capital expenditures and ii) interest payments on debt. Through the first channel, inflation increases firms’ taxable profits and further distorts their investment decisions. Through the second, expected inflation affects the effective real interest rate and stimulates investment. When debt is collateralized, the second effect dominates. Therefore, present a tax-advantage to debt financing, positive long-run inflation enhances welfare by mitigating or even eliminating the investment distortion., info:eu-repo/semantics/published

This study examines the relationships between the origin of chief executive officers (CEOs), and the performance and risk-taking levels of their companies. It is based on a sample of 353 microfinance institutions (MFIs) from 76 countries, with data covering the period 1996-2011. We use return on assets and operational costs as performance metrics, and the standard deviation of return on assets and operational costs as measures of risk. The results suggest that MFIs with an internally-recruited CEO achieve a significantly higher performance than MFIs with an externally-recruited CEO. More specifically, MFIs with an ‘insider CEO’ have a positive association with return on assets, but a negative association with operational costs. Moreover, internally-recruited CEOs appear to be associated with a lower level of risk. We believe that these results are important and have clear policy implications, in particular for an industry with such a thin labour market for CEOs and lack of managerial capacity. Our findings are consistent with the view that insider CEOs have firm-specific skills, experience and network resources that result in an enhanced MFIs performance and low-risk., info:eu-repo/semantics/published

Microfinance, which pledges to provide financial services to people without access to banking, is chiefly run by non-governmental organizations (NGOs). Little is known about the extent to which the transformation of these NGOs into shareholder-owned and, most often, regulated firms affects the way microfinance institutions (MFIs) conduct their business. By applying the event study methodology to 66 MFIs that have transformed, we quantify the effect that transformation has on the MFIs’ business models. Our results suggest that portfolio yield is driven down by 3.9 percentage points due to transformation, indicating that clients get more favorable interest rates. At the same time, MFIs are able to significantly cut down their operational expenses, of which 1.1 percentage points can be attributed to transformation. Other findings include a steep increase in commercial debt leverage and deposits, a significant decrease in the fluctuation of funding costs and a sharp rise in average loan size. Profitability goes down in the short and medium term, while return on equity is driven up in the medium to long run. By exploiting within-MFI data, our approach goes beyond previous studies that mainly relied on between-MFI data. Overall, the results suggest that transformed MFIs become an attractive environment for investors, potentially encouraging a more profit-seeking behavior among transformed MFIs., info:eu-repo/semantics/published

By artificially inflating capital and creating own shares, cross-ownership can be a key device for managerial entrenchment. This paper proposes a game-theoretical method to measure the extent of shareholder expropriation through cross-ownership. By properly accounting for cross-ownership linkages, we show how managers can seize indirect voting rights, and so insulate their firms from outside control. Significant examples of cross-ownership are found not only in civil law countries, but also in the U.S. mutual fund industry. We apply our method to Germany’s Allianz Group. This paper paves the way to better regulatory appraisal of management entrenchment through cross-ownership., info:eu-repo/semantics/published

Recent evidence shows that the poor desperately need access to savings products. But despite this general consensus, microfinance institutions (MFIs) offering savings products are still under-studied. Using random-effect probit estimation on a dataset of 722 MFIs active over the 2005-2010 period, we try to identify the characteristics of those that collect voluntary savings. Our results suggest that these MFIs have received fewer subsidies than their credit-only counterparts. In other words, subsidies would crowd out micro-savings products, suggesting that donors generate negative externalities on product diversification., info:eu-repo/semantics/published

We propose a market-based framework that exploits time-varying parameter vector autoregressions to estimate the dynamic network of financial spillover effects. We apply it to financials in the Standard & Poor’s 500 index and estimate interconnectedness at the sectoral and institutional levels. At the sectoral level, we uncover two main events in terms of interconnectedness: the Long-Term Capital Management crisis and the 2008 financial crisis. After these crisis events, we find a gradual decrease in interconnectedness, not observable using the classical rolling-window approach. At the institutional level, our framework delivers more stable interconnectedness rankings than other comparable market-based measures.

This article develops a theoretical framework to analyze options for financing infrastructurein developing countries. We build a basic model that gives motivations for usinga combination of public finance, private debt and private equity. The model is thenextended in a number of ways to examine a variety of factors that are important fordeveloping countries when considering financing choices. We focus in particular on keyinstitutional weaknesses that are often important for infrastructure investment. Overall,we show that such weaknesses can be key in determining financing choices, but that theydo not all push in the same direction. Financing schemes must therefore be adapted toconsider the institutional limitations that are most pertinent in any given context., info:eu-repo/semantics/published

This paper uses worldwide firm-level data to scrutinize the governance factors that favor gender diversity in leadership positions. Our results reveal that the gender of the dominant shareholder is key. The chief executive of firms with a female dominant shareholder has a significantly higher probability of being a woman than in other firms. The effect is even more pronounced when the female shareholder holds a higher share of the capital and when the firm is foreign-owned. Our results suggest that “old boys’ club” ownership structures are a major impediment to the empowerment of female talent in developing countries., info:eu-repo/semantics/published

This study investigates a longitudinal dataset consisting of financial and operational data from 37 listed companies listed on Vietnamese stock market, covering the period 2004-13. By performing three main types of regression analysis - pooled OLS, fixed-effect and random-effect regressions - the investigation finds mixed results on the relationships between operational scales, sources of finance and firms' performance, depending on the choice of analytical model and use of independent/dependent variables. In most situation, fixed-effect models appear to be preferable, providing for reasonably consistent results. Toward the end, the paper offers some further explanation about the obtained insights, which reflect the nature of a business environment of a transition economy and an emerging market., info:eu-repo/semantics/published

Cash holdings have often been presumed to help resolve the inherent uncertainty of assessing banks. Nonetheless, extant empirical evidence is inconclusive. The present paper adopts a novel approach to assessing the level of stockholder uncertainty associated with the cash holdings reported by European banks before, during, and after the financial crisis of 2007-2009. The paper finds that stockholder uncertainty may be significant when cash holdings exceed or fall short of the levels warranted to meet depositor demands. It concludes that investors monitor bank cash holdings in relation to short-term liabilities. Cash holdings may thus contribute to making banks more opaque., info:eu-repo/semantics/published

In countries with weak institutions board governance becomes more important. This study uses a unique dataset from listed Sub-Saharan African companies to examine the relationship between ownership composition and board compensation. It further analyses the association between board compensation and company performance. The findings indicate that board ownership and CEO ownership are positively associated while state ownership and concentrated ownership are negatively associated with board compensation. There is no evidence of a significant association between chairperson ownership or foreign ownership and board compensation. Finally, there is a negative but not significantly relationship between board compensation and company performance., info:eu-repo/semantics/published

Current study aims to provide new and first empirical evidence on the impact of debt oncorporate profitability of French service sector. This impact can be explained by three essentialtheories: signaling theory, tax theory and the agency cost theory. Using panel data sample of2240 French non listed companies of service sector during 1999-2006. By utilizing generalizedmethod of moments (GMM) econometric technique on three measures of profitability ratio(PROF1, PROF2 and ROA), we show that debt ratio has no effect on corporate profitability,regardless of the size of company (VSEs, SMEs or LEs)., info:eu-repo/semantics/published

Existing research argues that convertible bonds mitigate issuers’ external financing costs offinancial distress, agency conflicts and informational asymmetry. The purpose of this paper is totest whether callable convertible bonds are designed in response to costly debt- and equityrelatedfinancing problems. We identify the design (debt-, mixed- and equity-like) of callableconvertible bonds using a measure of conversion probability which accounts for callability.Indeed, most of the existing empirical financial literature on convertible debt design does notpay much attention to the call feature in spite of its important repercussions on the securitydesign. The empirical study provides evidence from 213 French callable convertible bonds overthe period 1990-2010 that the issuer features, and hence the offering motives vary with thedesign of callable convertible debt., info:eu-repo/semantics/published

In this global world many firms present a complex shareholding structure with indirect participation, such that it may become difficult to assess a firm’s controllers. Furthermore, if there are numerous dominant shareholders, the control can be shared between them. Determining who has the most influence often is a difficult task. To measure this influence, game theory allows modeling voting game and computing the Banzhaf index. This paper first offers a new algorithm to compute this index in all structures and suggests some modelisations of the floating shareholder. Then, our model is applied to a real case study: The French Group Lafarge. This exemplary case demonstrates how the float’s structure and hidden coalition can impact the power relationship between dominant shareholders., info:eu-repo/semantics/published

In this paper we compare the main regulatory frameworks: American (US RBC, Risk-Based-Capital), Swiss (SST, Swiss Solvency Test) and European (Solvency II). We improve on the existing literature by focusing on technical aspects of regulation schemes, particularly the capital requirements’ calculation and by including latest quantitative and qualitative improvements of the Solvency II project. The comparison concludes that Swiss and European systems are advanced regulatory processes in comparison with American regulation although the latter system was perceived as a revolution some years ago. Even if the Swiss regime and the future European directive are quite similar, there are also some key differences to highlight. European approach to determine regulatory capital is mainly risk-sensitive, based on risk measures, whereas US RBC is mainly based on static factors and accounting data reported in the audited statutory annual statement. The three systems also differ with regards to the use of different risk measures, the consideration of operational and catastrophe risks, the use of internal models, the treatment of diversification effect, the limits imposed to investments, and the consideration of qualitative aspects., info:eu-repo/semantics/published

Corporate bond appeared early in 1992-1994 in Vietnamese capital markets. However, it is still not popular to both business sector and academic circle. This paper explores different dimensions of Vietnamese corporate bond market using a unique, and perhaps, most complete dataset. State not only intervenes in the bond markets with its powerful budget and policies but also competes directly with enterprises. The dominance of SOEs and large corporations also prevents SMEs from this debt financing vehicle. Whenever a convertible term is available, bondholders are more willing to accept lower fixed income payoff. But they would not likely stick to it. On one hand, prospective bondholders could value the holdings of equity when realized favorably ex ante. On the other hand, the applicable coupon rate for such bond could turn out negative inflationadjusted payoff when tight monetary policy is exercised and the corresponding equity holding turns out valueless, ex post. Given the weak primary market and virtually nonexistent secondary market, the corporate bond market in Vietnam reflects our perception of the relationship-based and rent-seeking behavior in the financial markets. For the corporate bonds to really work, they critically need a higher level of liquidity to become truly tradable financial assets., info:eu-repo/semantics/published

We complement standard portfolio theory à la Markowitz by adding a social dimension. We distinguish between two main setups, taking social returns as stochastic in the first, but as deterministic in the second. Two main features need to be introduced: Every asset must be assigned a (distribution of) social return(s), and the investor has to cherish social returns. The former comes with measurement problems, whereas the latter is mainly a problem of choice of a suitable utility representation. The focus of this paper is on the theoretical fundamentals and the practical implications of social returns. We apply each version of the theoretical model to a different realm. In the deterministic setup, we look at an investor who faces a small number of assets: the S&P Euro Index, the EuroMTS Global Index, and the responsAbility Global Microfinance, where we assign a social return only to the microfinance investment fund. In the second application with stochastic social returns, we estimate statistical moments of social returns of various microfinance institutions and address the question how microfinance investment funds should allocate funds to microfinance institutions., info:eu-repo/semantics/published

This paper investigates the influence of firm control structure on firm individual economic performance using a unique firm level data set of ownership and balance sheet information. This study fills a gap in the empirical governance literature by investigating whether or not there is expropriation of minority shareholders in small business groups. Contrary to what is usually observed for large business groups’ results show a positive relationship between the separation of control from ownership and firm performance. Results also underline that tunneling, in small business groups, seems motivated by controlling shareholders’ profit stability rather than profit maximization., info:eu-repo/semantics/published

We empirically investigate the determinants of lenders concentration providing bank loans to European borrowers. We analyze the influence of loan and borrower characteristics but also legal enforcement variables that are expected to influence the financial and strategic decisions related to bank lending concentration. We find that firms tend to diversify sources of financing by reducing concentration when their level of quality is higher and both asymmetric information and the risk of early liquidation are minimal. Furthermore, lenders’ monitoring appears to be an important feature of lending concentration, particularly in order to prevent private benefits extraction by insiders in legal environment where shareholders benefit from better protections., Special Issue "26th Symposium on Money, Banking and Finance" Guest Editors :Sébastien Galanti and Grégory Levieuge, info:eu-repo/semantics/published

This paper uses a very large sample of French SMEs to study growth of family owned firms. Firms range from total-family to minority control. The estimated relationship accounts for firm characteristics of size and, age, sector, and financial solvency. The results show that firms with greater family control are prone to exhibit lower rates of sales growth than feasible, given financial performance. Because firm growth is limited not by financing constraints but by family-related attitudes, increasing firm growth requires policies that shape incentives in small family businesses., info:eu-repo/semantics/published

The company Elia, which manages the grid system of electricity in Belgium, is mainly controlled by the principal producer of electricity, Electrabel, and by political powers. The Belgian state has recently constrained the French group to yield 3% of its stake in Elia as foreseen in the Pax Electrica agreements. This article studies the impact of this transfer by means of the Banzhaf index that measures the intensity of control. The results show that theoretically these agreements change the power relationship on the manager of the grid., info:eu-repo/semantics/published

En Afrique subsaharienne, les zones agricoles et rurales abritent plus de trois quarts de la population et contribuent pour la grande part à l’emploi, au PIB, aux recettes d’exportations et à l’offre alimentaire. Dès lors, le financement des activités qui se développent dans ces zones constitue un facteur déterminant dans la réduction de la pauvreté. Le recul du financement bancaire, suite à la libéralisation financière (de par la restructuration des banques agricoles et de développement), a accentué la faiblesse des services financiers dans ces zones. Cette situation a suscité un intérêt croissant pour la microfinance dans le financement et la promotion de la petite entreprise agricole et rurale présentée comme le pilier de la croissance économique. Cependant, malgré sa forte contribution, la microfinance est limitée dans ses apports. L’une des principales limites concerne l’inadéquation entre la gamme des services financiers offerts par les IMF et les besoins spécifiques du financement agricole et rural. Dans ce papier, nous abordons cette problématique en essayant d’analyser dans quelle mesure améliorer la contribution de la microfinance au financement agricole et rural au Burundi et dans quelle mesure les politiques publiques peuvent contribuer à cet objectif., info:eu-repo/semantics/published

Using a large international firm-level data set, we estimate separate effects of host and parent country taxation on the location decisions of multinational firms. Both types of taxation are estimated to have a negative impact on the location of new foreign subsidiaries. In fact, the impact of parent country taxation is estimated to be relatively large, possibly reflecting its international discriminatory nature. For the cross-section of multinational firms, we find that parent firms tend to be located in countries with a relatively low taxation of foreign-source income. Overall, our results show that parent-country taxation – despite the general possibility of deferral of taxation until income repatriation – is instrumental in shaping the structure of multinational enterprise., info:eu-repo/semantics/published

Today, the shareholding structure of companies is sometimes so complex that it can be difficult to find back their actual owners and controllers. In particular, in continental Europe and in Asia, control tunnelling appears frequently through pyramidal structure. After describing the ownership structure through a graph association, this paper analyses the voting game at stake in the race for control. It compares existing methods and algorithms to identify the owners and controllers of a firm in a pyramidal structure without cross-ownership. As a real life example, the case of the Belgian retail company, Colruyt, is used to apply these different methods and compare their results. Furthermore, it shows how the ownership structure allows to the Colruyt family to keep the control of Colruyt even if there are discordances inside the family., info:eu-repo/semantics/published

Farber, Gillet and Szafarz (2006) propose a general formula for the WACC in which the expected return on the tax shield appears explicitly. The classical Modigliani-Miller and Harris-Pringle WACC formulas for specific debt policies are then derived from the general formula after having determined the corresponding tax shield expected returns. Replying to Fernandez’ (2007) comment, this note explores, in addition, the validity of the general formula in the Miles-Ezzel setup with annual adjustment of the level of debt to maintain a constant market-value debt ratio., info:eu-repo/semantics/published

This paper presents a model of a multinational firm’s optimal debt policy that incorporates international taxation factors. The model yields the prediction that a multinational firm’s indebtedness in a country depends on a weighted average of national tax rates and differences between national and foreign tax rates. These differences matter as multinationals have an incentive to shift debt to high-tax countries. The predictions of the model are tested using a novel firm-level dataset for European multinationals and their subsidiaries, combined with newly collected data on the international tax treatment of dividend and interest streams. Our empirical results show that a foreign subsidiary’s capital structure reflects local corporate tax rates as well as tax rate differences vis-à-vis the parent firm and other foreign subsidiaries, although the overall economic effect of taxes on leverage appears to be small. Ignoring the international debt shifting arising from differences in national tax rates woudunderstate the impact of national taxes on debt policies by about 25%., info:eu-repo/semantics/published

Control tunnelling over firms can be reached through pyramids, cross-ownership, and other complex features. This phenomenon is frequent in Europe and in Asia. However, the theoretical literature has not yet converged toward a well-defined and robust measurement of integrated control that takes into account the threshold for control as applied in practice. Based on graph theory, this paper aims at filling this gap and proposes a new algorithm for evaluating the control tunnelling exerted by the firms' ultimate shareholders. Then, the paper discusses the various forms of control existing next to voting shares, like multiple voting rights, board representation and active monitoring, before suggesting ways to include them into the modelling of control., info:eu-repo/semantics/published

Recent controversies testify that the tax shield valuation remains a hot topic in the financial literature. Basically, two methods have been proposed to incorporate the tax benefit of debt in the present value computation: The adjusted present value(APV), and the classical weighted average cost of capital (WACC). This note clarifies the relationship between these two apparently different approaches by offering a general formula for the WACC. This formula encompasses earlier results obtained by Modigliani and Miller (1963) and Harris and Pringle (1985)., info:eu-repo/semantics/published

Pyramids, cross-ownership, rings, and other complex features inducing control tunnelling are frequent in the European and Asian industrial world. Based on the matrix methodology, this paper offers a model for measuring integrated ownership and threshold-based control, applicable to any group of interrelated firms. In line with the theory on pyramidal control, the model avoids the double counting problem and sets the full-control threshold at the conservative - but incontestable - majority level of 50% of the voting shares. Any lower threshold leads to potential inconsistencies and leaves unexplained the observed high level of ownership of many dominant shareholders. Furthermore, the models leads to ultimate shareholders' control ratios consistent with the majority voting rule. Finally, it is applied to the Frère Group, a large European pyramidal holding company known for mastering control leverages., info:eu-repo/semantics/published

This paper investigates the common patterns of ownership structure across different corporate governance systems. We test the predictions of Zwiebel (1995) using ownership data of Belgian listed companies in 1995 and in 1999. Results show good applicability of the model. This empirical research relates to other contributions performing tests for Hungary, Poland, and Spain. Next the model and its limitations are discussed. The paper opens promising fields for research in ownership structure modeling adapted to corporate governance systems of Continental and Eastern Europe., info:eu-repo/semantics/published

Complex structure of ownership like cross-ownership, rings, and pyramids are common in Continental Europe, Eastern Europe, and in Asia. This paper aims at dissecting these complex features by a proper measurement of direct and indirect holdings. Building on Brioschi et al. (1989), we use the input-output matrix methodology and we add control considerations in the matrix calculations to derive a straightforward method of quantifying the separation between ownership and control for a firm or a shareholder, named the “separation ratio”. After giving an overview of the full ownership structure of the listed Belgian companies, we present and apply our method to a database of more than 800 companies and individuals linked to the Belgian listed firms. Next, we replicate the approach with data from several European countries and the United States. These international comparisons allow evaluating the interactions between the economic environment of a country, and its corporate governance features., info:eu-repo/semantics/published

Using an original survey sample of 103 unquoted Belgian technology-based small firms (TBSFs), we examine the capital structure of start-up companies during their consecutive development stages. We find that internal funds, either alone as personal savings or in combination with family and friends, to be the primary source of financing. Personal funds of the founders are used to finance the start of 82 percent of TBSFs. Commercial bank and government funds are the most important sources of external finance for TBSFs subsequent to start-up. Most founders agreed that business angels and venture capitalists play a greater role at later stages. However, once granted, more substantial amounts of funding come from venture capitalists. There is also evidence that suggests an evolution in the mix of internal and external sources of finance. Finally, our findings based on founders’ scores in raising external funds suggest a call for urgent policy action to improve access to and availability of early-stage entrepreneurial finance in Belgium. We discuss our findings in light of the capital structure of small firms relating to TBSFs., info:eu-repo/semantics/published