Firm Growth Dynamics and Financial Constraints: Evidence from Serbian Firms

Milos Markovic () and Michael Stemmer
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Milos Markovic: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: Using a unique dataset of unlisted Serbian firms during the period between 2005 and 2012, we analyze the impact of internal financial constraints on firm growth with respect to several firm-level characteristics. We also assess potential effects created by the 2008-2009 Global Financial Crisis. To do so, we rely on panel data models, which estimate via GMM cash flow sensitivities of firm growth, following the dynamic specification of Guariglia et al. (2011). Controlling for investment opportunities, our results show that Serbian firms face high financial constraints and exhibit generally a high reliance on retained earnings for firm growth. We do not find evidence for a crisis effect, potentially due to ex ante accumulated internal funds. Conventional firm characteristics such as age, size or overall performance largely determine the dependency on cash for firm growth. Moreover, foreign-owned companies seem to escape the financing gap by tapping other resources. A comparison with Belgian firms contrasts our results with an advanced country setting.

Keywords: Financial constraints; firm growth; transition countries; dynamic panel data; GMM (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ent, nep-sbm and nep-tra
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01489222
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Published in 2017

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Related works:
Working Paper: Firm Growth Dynamics and Financial Constraints: Evidence from Serbian Firms (2017)
Working Paper: Firm Growth Dynamics and Financial Constraints: Evidence from Serbian Firms (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-01489222

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