The Pecking Order Theory and Start-up Financing of Small and Medium Enterprises: Insight into Available Literature in the Libyan Context

Purpose: The Pecking Order Theory states that internal financing is preferred when available; and, if external financing is required, debt is preferred over equity. Thus, this paper aims to test the application of The Pecking Order Theory as an exploitation of start-up financing of Small and Medium Enterprises in Libya. Design/Methodology/Approach: Desk research was used. A comprehensive literature search of published academic, peer reviewed professional literature using a variety of databases including journal articles, conference papers and thesis, both published and unpublished, was conducted. The main sources were the Internet. Findings: By reviewing the available literature on access to finance by Small and Medium Enterprises in Libya, the Pecking Order Theory was supported. Research limitations: This study is limited to start-up stage. Moreover, the main limitation of the literature review, as a study methodology, is that it relies on information which has already been researched. Thus, an empirical study is needed to provide more support to findings of this study. Originality/Value: This is the first review of this area and thus should help intending and existing scholars. It could help policy makers to undertake some serious public policy serving the Small and Medium Enterprises access to finance.