The financial growth cycle model for small and medium size enterprises (SMEs) proposed by A. N. Berger and G. F. Udell postulates that financial needs and financing options of SMEs change as firms become larger, older, and more transparent informationally. The model predicts that as a firm...

This paper is concerned with the role of firm heterogeneity under credit constraints for economic growth. We focus on firm size, innovativeness and credit constraints in a semi-endogenous growth model reflecting recent empirical findings on firm heterogeneity. It allows for an explicit solution...