Interest expenses have a significant impact on the debt ratio, regardless of the studied sample. This finding supports the important role played by this variable in the financing policy of SMEs. Trade Off theory is validated in explaining the structure of SME financing regardless of the activity of the company. In small structures such as SMEs, where the risk of bankruptcy is important, tax advantages are minimal from where a less recourse to the bank debt.
The volatility of corporate earnings has a significant influence only for to the services sector. This implies that SMEs investing in this type of activity are riskier than industrial SMEs. It should be noted that a significant proportion of SMEs in the services sector invest in trading activities, real estate, tourism and communications. They are more exposed to fluctuations of the economic conjuncture than the industrial companies. Especially as, these activities are unstable and face very strong competitions. As a result, banks are vigilant to finance such companies whose generated flows are very volatile.
The positive relationship between growth opportunities and bank debt ratio supported by agency theory is not verified for SME’s service providers. Indeed, banks consider that growth opportunities increase the conflicts of interest, and lending to risky firms support further the increase of the risk of asset substitution. Investment in this kind of activities which are difficult to evaluate and to control, give leaders a flexibility that allows them to undertake riskier projects than those as originally announced to creditors. The latter anticipating such behavior, are