Stock market development and firm financing choices

Asli Demirguc-Kunt and Vojislav Maksimovic

No 1461, Policy Research Working Paper Series from The World Bank

Abstract: The authors empirically analyze the association between firm financing choices and the level of development of financial markets in 30 countries for the period 1980-91. For the whole sample, there is a statistically significant negative correlation between stock market development, as measured by the ratio of market capitalization to gross domestic product, and the ratios of both long-term and short-term debt to firms'total equity. For developed markets in the sample, further stock market development leads to a substitution of equity for debt financing. In developing markets, by contrast, large firms become more leveraged as the stock market develops, whereas the smallest firms appear not to be significantly affected by market development.

Keywords: Banks&Banking Reform; Economic Theory&Research; Payment Systems&Infrastructure; Financial Intermediation; International Terrorism&Counterterrorism; Economic Theory&Research; Financial Intermediation; Banks&Banking Reform; Housing Finance; Environmental Economics&Policies (search for similar items in EconPapers)
Date: 1995-05-31
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... d/PDF/multi_page.pdf (application/pdf)

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:wbk:wbrwps:1461

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().