Financing Patterns around the World : The Role of Institutions
Using a firm-level survey database covering 48 countries, the authors investigate whether differences in financial and legal development affect the way firms finance their investments. The results indicate that external financing of investments is...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2002/10/2038228/financing-patterns-around-world-role-institutions http://hdl.handle.net/10986/19214 |
| Summary: | Using a firm-level survey database
covering 48 countries, the authors investigate whether
differences in financial and legal development affect the
way firms finance their investments. The results indicate
that external financing of investments is not a function of
institutions, although the form of external finance is. The
authors identify two explanations for this. First, legal and
financial institutions affect different types of external
finance in offsetting ways. Second, firm size is an
important determinant of whether firms can have access to
different types of external finance. Larger firms with
financing needs are more likely to use external finance
compared with small firms. The results also indicate that
these firms are more likely to use external finance in more
developed financial systems, particularly debt and equity
finance. The authors also find evidence consistent with the
pecking order theory in financially developed countries,
particularly for large firms. |
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