Financial Constraints and Firm Size: Micro-Evidence and Aggregate Implications

Miguel H. Ferreira, Timo Haber and Christian Rörig
Additional contact information
Miguel H. Ferreira: QMUL and CEPR
Christian Rörig: QuantCo

No 948, Working Papers from Queen Mary University of London, School of Economics and Finance

Abstract: Using a unique dataset covering the universe of Portuguese firms and their credit situation we show that financially constrained firms are found across the entire firm size distribution, even in the top 1%. Incorporating a richer, empirically supported, productivity process into a standard heterogeneous firms model generates a joint distribution of size and credit constraints in line with the data. The presence of large constrained firms in the economy, together with their elevated capital share, explains about 66% of the response of output to a financial shock. We conclude by providing micro-evidence in support of the model mechanism.

Keywords: Firm size; business cycle; financial accelerator (search for similar items in EconPapers)
JEL-codes: E22 E23 E62 (search for similar items in EconPapers)
Date: 2023-06-14
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-dge, nep-ent, nep-fdg, nep-mfd and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/wp948.pdf (application/pdf)

Related works:
Working Paper: Financial Constraints and Firm Size: Micro-Evidence and Aggregate Implications (2023)
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:qmw:qmwecw:948

Access Statistics for this paper

More papers in Working Papers from Queen Mary University of London, School of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Nicholas Owen ( this e-mail address is bad, please contact ).