"Our study confirms that the financial constraints to SME’s growth tend to appear as an excess of . sensibility of the investment expenditures on firm’s cash flow. Through the application of dynamic panel data . techniques to an extended version of Eulero’s investment equation of a sample of Italian SMEs, the analysis . shows that the growth of the subsample of the small firms in backward regions of Italy is more constrained by . inside finance than that of firms in more developed regions. This is because the typical information opacity of . SMEs is worsened here by the unsatisfactory development of financial markets. Moreover, our analysis . ascertains that the small firms can significantly relax the constraints if they are able to establish a close . relationship with the banks making easier the access of bank to firm’s information. "