Capital structure of micro and small farming enterprises of southern Chile

Abstract

Taking into account the various approaches on capital structure selection offered by financing literature and the low credit access of micro and small farming enterprises, the capital structure of the 9^th Region-Chile enterprises with these features was studied. Their constitution was supported by the Awards of Farm Family Agriculture of INDAP between 1995 and 1999. It was found there are differences in capital structure and investment amounts between micro and small enterprises; although, generally, there is predominantly a debts above the contribution of their own resources, with amounts directly proportional to the total investment amounts and a high correlation between these parameters. Small enterprises make higher total investments and are able to contribute with greater proportions of their own resources, so they run into lower levels of indebtedness compared with micro-enterprises. Nevertheless, both types of enterprises can see their risk level increases as a result of high debt levels which are greater than an average of 65% of the increased total invesred.