Does Financial Constraint Hinder Firm Growth?

Chunyang Wang, Sujuan Zhao, Haitao Zheng and Yiyi Bai

Emerging Markets Finance and Trade, 2022, vol. 58, issue 15, 4195-4206

Abstract: Financial constraint is a major obstacle for firm growth in emerging economies. Using a World Business Environment Survey (WEBS) dataset, we find that formal financing constraint hampers firm growth. Small firms suffer more than large ones from financial constraint, whereas there is no significant difference between state-owned enterprises (SOEs) and non-SOEs. Our results are robust when we use collateral constraint as an instrumental variable for formal financial constraint. We provide supporting evidence for the promulgation of financial liberalization, which can help alleviate financial constraint, enhance firm growth, and therefore improve economic resilience and prevent financial risks in an emerging economy such as China.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2022.2069490 (text/html)
Access to full text is restricted to subscribers.

Related works:
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:mes:emfitr:v:58:y:2022:i:15:p:4195-4206

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2022.2069490

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().