EconPapers    
Economics at your fingertips  
 

Firm dynamics and financial development

Cristina Arellano, Yan Bai and Jing Zhang

No 392, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: This paper studies the impact of cross-country variation in financial market development on firms? financing choices and growth rates using comprehensive firm-level datasets. We document that in less financially developed economies, small firms grow faster and have lower debt to asset ratios than large firms. We then develop a quantitative model where financial frictions drive firm growth and debt financing through the availability of credit and default risk. We parameterize the model to the firms? financial structure in the data and show that financial restrictions can account for the majority of the difference in growth rates between firms of different sizes across countries. ; Original title: Contract enforcement and firms' financing

Keywords: Debt management; Contracts (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cfn, nep-dge and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.minneapolisfed.org/research/SR/SR392.pdf
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=1092 (application/pdf)

Related works:
Journal Article: Firm dynamics and financial development (2012) Downloads
Working Paper: Firm Dynamics and Financial Development (2009) Downloads
Working Paper: Firm Dynamics and Financial Development (2009)
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:fip:fedmsr:392

Access Statistics for this paper

More papers in Staff Report from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().

 
Page updated 2025-03-30
Handle: RePEc:fip:fedmsr:392