Informal or Formal Financing? Or Both? First Evidence on the Co-Funding of Chinese Firms

Hans Degryse, Steven Ongena and Liping Lu

No 9519, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The recent financial crisis has reopened the debate on the impact of informal and formal finance on firm growth in developing countries. Using unique survey data, we find that informal finance is associated with higher sales growth for small firms and lower sales growth for large firms. We identify a complementary effect between informal and formal finance for the sales growth of small firms, but not for large firms. Informal finance offers informational and monitoring advantages, while formal finance offers relatively inexpensive funds. Co-funding, i.e. the simultaneous use of formal and informal finance, is the optimal choice for small firms.

Keywords: Co-funding; Formal finance; Growth; Informal finance (search for similar items in EconPapers)
JEL-codes: G21 G32 P2 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-ifn, nep-iue, nep-mfd and nep-sbm
References: Add references at CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
https://cepr.org/publications/DP9519 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Informal or Formal Financing? Or Both? First Evidence on the Co-Funding of Chinese Firms (2013)
Working Paper: Informal or Formal Financing? Or Both? First Evidence on the Co-Funding of Chinese Firms (2013)
Working Paper: Informal or Formal Financing? Or Both? First Evidence on the Co-Funding of Chinese Firms (2013)
Working Paper: Informal or formal financing? Or both? First evidence on the co-funding of Chinese firms (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:9519

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP9519

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().