Adverse selection, endogenous borrowing constraints and firm growth
AbstractIf banks face asymmetric information about loan quality, endogenous borrowing constraints which restrict the size of new firms may emerge in equilibrium. High quality firms reduce financing costs by starting off small and increasing their size over time.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 108 (2010)
Issue (Month): 2 (August)
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Web page: http://www.elsevier.com/locate/ecolet
Endogenous borrowing constraints Firm growth Asymmetric information;
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