Does Financial Liberalization Relax Financing Constraints On Firms
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Author | : Luc Laeven |
Publisher | : |
Total Pages | : 56 |
Release | : 2000 |
Genre | : Business enterprises |
ISBN | : |
Download Does Financial Liberalization Relax Financing Constraints on Firms? Book in PDF, Epub and Kindle
Financial liberalization reduces imperfections in financial markets by reducing the agency costs of financial leverage. Small firms gain most from liberalization, because the favoritism of preferential credit directed to large firms tends to disappear under liberalization.
Author | : Meghana Ayyagari |
Publisher | : World Bank Publications |
Total Pages | : 59 |
Release | : 2006 |
Genre | : Business enterprises |
ISBN | : |
Download How important are financing constraints? : the role of finance in the business environment Book in PDF, Epub and Kindle
What role does the business environment play in promoting and restraining firm growth? Recent literature points to a number of factors as obstacles to growth. Inefficient functioning of financial markets, inadequate security and enforcement of property rights, poor provision of infrastructure, inefficient regulation and taxation, and broader governance features such as corruption and macroeconomic stability are discussed without any comparative evidence on their ordering. In this paper, the authors use firm level survey data to present evidence on the relative importance of different features of the business environment. They find that although firms report many obstacles to growth, not all the obstacles are equally constraining. Some affect firm growth only indirectly through their influence on other obstacles, or not at all. Using Directed Acyclic Graph methodology as well as regressions, the authors find that only obstacles related to finance, crime, and political instability directly affect the growth rate of firms. Robustness tests further show that the finance result is the most robust of the three. These results have important policy implications for the priority of reform efforts. They show that maintaining political stability, keeping crime under control, and undertaking financial sector reforms to relax financing constraints are likely to be the most effective routes to promote firm growth.
Author | : Luc Laeven |
Publisher | : |
Total Pages | : |
Release | : 2009 |
Genre | : |
ISBN | : |
Download Does Financial Liberalization Reduce Financing Constraints? Book in PDF, Epub and Kindle
I use panel data on a large number of firms in 13 developing countries to find out whether financial liberalization relaxes financing constraints of firms. I find that liberalization affects small and large firms differently. Small firms are financially constrained before the start of the liberalization process, but become less so after liberalization. Financing constraints of large firms, however, are low before financial liberalization, but become higher as financial liberalization proceeds. I hypothesize that financial liberalization has adverse effects on the financing constraints of large firms, because these firms had better access to preferential directed credit during the period before financial liberalization.
Author | : Meghana Ayyagari |
Publisher | : |
Total Pages | : |
Release | : 2012 |
Genre | : |
ISBN | : |
Download How Important Are Financing Constraints? The Role of Finance in the Business Environment Book in PDF, Epub and Kindle
What role does the business environment play in promoting and restraining firm growth? Recent literature points to a number of factors as obstacles to growth. Inefficient functioning of financial markets, inadequate security and enforcement of property rights, poor provision of infrastructure, inefficient regulation and taxation, and broader governance features such as corruption and macroeconomic stability are all discussed without any comparative evidence on their ordering. In this paper, we use firm level survey data to present evidence on the relative importance of different features of the business environment. We find that although firms report many obstacles to growth, not all the obstacles are equally constraining. Some affect firm growth only indirectly through their influence on other obstacles, or not at all. Using Directed Acyclic Graph (DAG) methodology as well as regressions, we find that only obstacles related to Finance, Crime and Policy Instability directly affect the growth rate of firms. Robustness tests further show that the Finance result is the most robust of the three. These results have important policy implications for the priority of reform efforts. Our results show that maintaining policy stability, keeping crime under control, and undertaking financial sector reforms to relax financing constraints are likely to be the most effective routes to promote firm growth.
Author | : Meghana Ayyagari |
Publisher | : |
Total Pages | : |
Release | : 2008 |
Genre | : |
ISBN | : |
Download How Important Are Financing Constraints? The Role of Finance in the Business Environment Book in PDF, Epub and Kindle
Author | : Meghana Ayyagari |
Publisher | : |
Total Pages | : 47 |
Release | : 2016 |
Genre | : |
ISBN | : |
Download How Important are Financing Constraints? The Role of Finance in the Business Environment Book in PDF, Epub and Kindle
What role does the business environment play in promoting and restraining firm growth? Recent literature points to a number of factors as obstacles to growth. Inefficient functioning of financial markets, inadequate security and enforcement of property rights, poor provision of infrastructure, inefficient regulation and taxation, and broader governance features such as corruption and macroeconomic stability are all discussed without any comparative evidence on their ordering. In this paper, we use firm level survey data to present evidence on the relative importance of different features of the business environment. We find that although firms report many obstacles to growth, not all the obstacles are equally constraining. Some affect firm growth only indirectly through their influence on other obstacles, or not at all. Using Directed Acyclic Graph (DAG) methodology as well as regressions, we find that only obstacles related to Finance, Crime and Policy Instability directly affect the growth rate of firms. Robustness tests further show that the Finance result is the most robust of the three. These results have important policy implications for the priority of reform efforts. Our results show that maintaining policy stability, keeping crime under control, and undertaking financial sector reforms to relax financing constraints are likely to be the most effective routes to promote firm growth.
Author | : Luc Laeven |
Publisher | : |
Total Pages | : 50 |
Release | : 2000 |
Genre | : |
ISBN | : |
Download Does Financial Liberalization Relax Financing Contraints on Firms? Book in PDF, Epub and Kindle
Author | : Cemile Sancak |
Publisher | : International Monetary Fund |
Total Pages | : 40 |
Release | : 2002-06 |
Genre | : Business & Economics |
ISBN | : |
Download Financial Liberalization and Real Investment Book in PDF, Epub and Kindle
There is increasing emphasis on the importance of efficient financial markets for sustained real investment and economic growth, yet limited empirical research on the effects of the deregulation of financial markets on the firm's investment decisions. The purpose of this paper is to model the impact of financial reforms on borrowing constraints faced by firms and to test the impact of financial reforms on the investment decisions of firms in Turkey. To do so, the paper builds a dynamic investment model, where financial variables and real investment are linked through the net present value of the firm. The derived investment model is employed to test whether Turkey's efforts at financial liberalization in 1980 were able to relax the borrowing constraints faced by Turkish firms. A dynamic panel data methodology is used on a panel data set of 1036 Turkish firms over the 1983-86 period. In addition, time-series analysis is employed on Turkish aggregate data over the 1971-91 period.
Author | : |
Publisher | : |
Total Pages | : |
Release | : 2000 |
Genre | : Credit |
ISBN | : |
Download Financial Liberalization and Financing Constraints Book in PDF, Epub and Kindle
Financial liberalization reduces imperfections in financial markets by reducing the agency costs of financial leverage. Small firms gain most from liberalization, because the favoritism of preferential credit directed to large firms tends to disappear under liberalization.
Author | : John Williamson |
Publisher | : Princeton University International Finance Section, Department of Econmics |
Total Pages | : 86 |
Release | : 1998 |
Genre | : Business & Economics |
ISBN | : |
Download A Survey of Financial Liberalization Book in PDF, Epub and Kindle