Financial development and financing constraints: International evidence from the structural investment model

• 成果类型: Article
• 署名作者: Love, I
• 署名单位: The World Bank
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhg013
• 发表日期: 2003
• 页码: 765
• 关键词: capital-market imperfections; AGENCY COSTS; net worth; firm; LIBERALIZATION; decisions; BEHAVIOR; LAW

摘要

This article provides evidence that financial development impacts growth by reducing financing constraints that would otherwise distort efficient allocation of investment. The financing constraints are inferred from the investment Euler equation by assuming that the firm's stochastic discount factor is a function of the firm's financial position (specifically, the stock of liquid assets). The magnitude of the changes in the cost of capital is twice as large in a country with a low level of financial development as in a country with an average level of financial development. The size effect, business cycles, and legal environment effects are also considered.