The equity funding of smaller growing companies and regional stock exchanges

Abstract

The credit crisis has led to tightened bank so lending to smaller firms it is no surprise that the debate concerning the re-introduction of regional stock exchanges into the UK has received fresh impetus. This article analyses all UK based Initial Public Offerings (IPOs) on the Alternative Investment Market (AIM) to contribute to this debate and the small firm funding literature. The results indicate that London has dominated IPO activity on the AIM; this reflects the dynamism of this local economy rather than differential funding across the regions. A more fruitful approach than developing regional stock exchanges might be for the current stock exchange to develop stronger links with small business advice and networking organizations working with these existing mechanism/structures to enhance the supply of equity and debt finance to suitable firms much earlier in their life-cycles.