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This paper examines the financing structure of Small and Medium-sized Enterprises (SMEs) in Germany and questions whether an equity gap - or, more generally, a financing gap - exists. Reviewing the literature and available data sources, the authors find that financing constraints seem to affect, if at all, only a very small subgroup among highly growth-oriented firms. They do not detect any structural problems in average SME's capital structure. Rather, German Mittelstand firms appear to be non-growth oriented and content with their financing decisions. While the relationship-based German banking system helps to minimize the risk of credit rationing, trade credit offers an additional, stable form of liquidity "Insurance".
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