The head of the new West Midland stock exchange has criticised the "prophets of doom" predicting struggling business in the wake of recent market volatility.

Sue Summers, chief executive of Investbx - the online regional share trading facility for West Midland SMEs that launched in July - has urged businesses not to defer their growth plans as a result the drop in share prices and the threat of higher interest rates.

Ms Summers said SMEs needed to keep their business plans on track and should not be put off by scare stories. She said: "Every time we get talk of higher interest rates, the prophets of doom emerge with their warnings of dire times ahead for our businesses.

"Some such people represent businesses and some are just in pursuit of a headline. Either way, I don't accept their view. Whilst bouncing or falling share prices and the threat of higher interest rates do not help, the region's band of successful small and medium sized enterprises should still focus on their strategy and not be put off from seeking additional finance.

"Corrections in global markets for listed companies come and go but, as long as they do not destroy market confidence, business goes on and finance will still be available, and at a relatively reasonable cost in the light of returns to be made."

The recent volatility and falls in share prices around the world have been driven by fears surrounding weaknesses in the American "sub prime" lending market.

Uncertainty also spread to the stock market, wiping millions of pounds off the value of companies as analysts and stockbrokers calculated whether banks could still afford to help finance companies.

But Ms Summers said that firms with strong business strategies, operating in the right markets would get through economic "wobbles" without too much trouble.

She said: "As regards interest rates, even the threatened six per cent should not deter investment, providing efficient use is made of loan and working capital finance and as long as the mix of financing options is the best for the company.

"Smart investment will still be worth doing for the region's SMEs, which have the opportunity to invest in the right sectors of their businesses, whilst benefiting from their ability to react more quickly, than their larger competitors, to market changes.

"They also need to get the balance of their financing right.

"For many, this will involve an appropriate level of equity and bank finance, with asset finance integrated to give flexibility in terms of working capital and other cash requirements as the business grows."

Ms Summers said businesses in the West Midlands needed to stay calm and take a medium to long term view.

She added: "Many companies, like the ones we are talking to about joining Investbx, are geared up to grow over a period, without being deflected by short term concerns. One factor is that businesses should have a platform of enough equity capital to support long term investment and additional loan finance.

"This is one reason why we have created a share trading market for West Midlands companies, including those in Birmingham and for investors.

By encouraging liquidity we hope to make it easier for businesses to raise the right level of equity to achieve medium term goals, even when short term set backs are hitting global markets."