Beyond Bank Financing: SME Bond Issuance, M&A Activity and Operating Performance in Italy and Germany

This thesis conducts a comparative empirical analysis of alternative debt instruments for small and medium-sized enterprises (SMEs) in Italy and Germany over the period 2013-2024, with specific reference to the Italian minibond market and the German Mittelstandsanleihen market. Despite sharing a common European regulatory context shaped by the Capital Markets Union agenda, the two markets followed markedly divergent trajectories, a divergence that the thesis situates within a comparative institutional analysis of the regulatory architectures, investor base design, and market infrastructure characterising each jurisdiction. The empirical analysis addresses three research questions. The first investigates the financial determinants of minibond issuance through a logit and probit framework estimated on a sample of 1,517 firm-year observations. Results indicate that firm size, financial leverage, liquidity constraints, and interest coverage ratios are significant predictors of issuance probability, consistent with a financing gap narrative in which bond market access serves as a substitute for constrained bank credit. Firm age is negatively associated with issuance likelihood, and Italian firms exhibit significantly higher issuance propensity than their German counterparts, reflecting the structural differences in market depth documented in the institutional analysis. The second research question examines whether minibond issuance predicts subsequent merger and acquisition activity. Estimated on a full population sample of 541,409 firm-year observations, the logit specification identifies a positive and statistically significant association between bond issuance and subsequent M&A activity, with an average marginal effect of approximately 0.4 percentage points, suggesting that capital market access facilitates post-issuance corporate restructuring. The third research question assesses post-issuance operating performance relative to a matched control sample. OLS estimates indicate that bond issuance is associated with a significant expansion in total assets over the two-year post-issuance horizon, consistent with an investment effect. However, return on assets declines significantly in the same period, suggesting that short-term debt servicing costs and investment expenditure temporarily compress profitability. All models incorporate year and industry fixed effects, with standard errors clustered at the firm level. The findings contribute to the nascent empirical literature on SME bond markets in Europe and carry implications for the design of alternative financing frameworks in bank-dependent economies.