International Integration of Financial Markets and the Cost of Capital

Mitsuhiro Fukao

No 128, OECD Economics Department Working Papers from OECD Publishing

Abstract: Despite the increased capital mobility that has accompanied the trend towards liberalisation and international integration of financial markets, differences remain in financing costs and, in particular, the cost of capital, that similar businesses face in different countries. These differences have attracted considerable attention as important factors influencing international investment and productivity growth. A number of reviewed empirical studies suggest that Japan and Germany enjoyed a considerable advantage with regard to the cost of equity and, more broadly, the cost of capital compared to the United States and the United Kingdom in the 1980s. This was due to higher leverage, a much lower cost of equity in Japan and a lower cost of German firms' debt to banks. Many studies have argued that closer bank-customer relationships, and more stable prices and growth rates in Japan and Germany have tended to lower their cost of capital. More recent studies which cover the period ... Malgré la mobilité croissante du capital qui avait accompagné la tendance vers la libéralisation et l'intégration internationale des marchés financiers, des différences subsistent dans plusieurs pays dans les coûts de financement, en particulier dans celui du capital. Ces différences ont considérablement attiré l'attention en tant que facteurs importants qui influencent l'investissement international et la croissance de la productivité. Un certain nombre d'études critiques empiriques laissent entendre que le Japon et l'Allemagne ont bénéficié d'un avantage considérable en ce qui concerne le coût des actions, et plus largement le coût du capital par rapport aux États-Unis et au Royaume-Uni dans les années 80. Ceci était dû à un effet de "levier", un coût plus faible des actions au Japon et un faible coût des dettes des entreprises envers les banques en Allemagne. Plusieurs études ont démontré que des relations étroites banques-clients, ainsi que des prix et des taux de croissance ...

Date: 1993-01-01
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1787/777568427281 (text/html)

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:oec:ecoaaa:128-en

Access Statistics for this paper

More papers in OECD Economics Department Working Papers from OECD Publishing Contact information at EDIRC.
Bibliographic data for series maintained by ().