OECD Journal: Financial Market Trends

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The articles in Financial Market Trends focus on trends, structural issues and developments in financial markets and the financial sector.


Opportunities and limitations of public equity markets for SMEs

This article on public equity financing for small and medium-sized enterprises (SMEs) complements earlier OECD work on market-based finance for SMEs. The development of this market segment could promote investment in SMEs and, together with securitisation and other non-bank debt financing instruments, encourage an enhanced allocation of risk and risk taking, and thus support growth. Despite the benefits of public SME equity, its share is small and an equity gap exists for risk financing more generally. A number of important impediments to the wider use of public equities for SMEs are identified, such as admission cost and listing requirements, lack of liquidity, educational gaps, limited ecosystems, and tax treatment, all of which require attention by regulators and policy makers alike.


Keywords: initial public offering (IPO), small caps, risk capital, market-based finance, SME public equity markets, SME finance, exchanges, small equity offering, growth markets

G1: Financial Economics / General Financial Markets;
G2: Financial Economics / Financial Institutions and Services;
G23: Financial Economics / Financial Institutions and Services / Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors;
G28: Financial Economics / Financial Institutions and Services / Financial Institutions and Services: Government Policy and Regulation