Firm Growth Dynamics and Financial Constraints: Evidence from Serbian Firms

Milos Markovic () and Michael Stemmer
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Milos Markovic: Centre d'Economie de la Sorbonne, https://centredeconomiesorbonne.univ-paris1.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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)
JEL-codes: C23 D92 E44 G32 L25 O16 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2017-02
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ent, nep-mac, nep-sbm and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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ftp://mse.univ-paris1.fr/pub/mse/CES2017/17012.pdf (application/pdf)

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:mse:cesdoc:17012

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