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The financing and growth of firms in China and India: Evidence from capital markets

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  • Didier, Tatiana
  • Schmukler, Sergio L.

Abstract

This paper studies the extent to which firms in China and India use capital markets to obtain financing and grow. Using new data on domestic and international capital raising and firm performance, it finds that financial market activity has expanded less since the 1990s than aggregate figures suggest. Relatively few firms raise capital and even fewer attract most of the financing. Moreover, firms that issue equity or bonds are different and behave differently from other publicly listed firms. Among other things, they are typically larger and grow faster. The differences between users and nonusers exist before the capital raising, are associated with the probability of raising capital, and become more pronounced afterward. The size distribution of issuing firms shifts more over time than the distribution of those that do not issue, suggesting little convergence in size among listed firms.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 39 (2013)
Issue (Month): C ()
Pages: 111-137

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Handle: RePEc:eee:jimfin:v:39:y:2013:i:c:p:111-137

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Web page: http://www.elsevier.com/locate/inca/30443

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Keywords: Access to finance; Bond markets; Capital market development; Capital raising; Firm dynamics; Firm size distribution; Stock markets;

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References

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Cited by:
  1. Didier, Tatiana & Schmukler, Sergio L., 2014. "Financial development in Asia : beyond aggregate indicators," Policy Research Working Paper Series 6761, The World Bank.
  2. Sergio Schmukler & Tatiana Didier, 2013. "The Financing and Growth of Firms in China and India: Evidence from Capital Markets," 2013 Meeting Papers 98, Society for Economic Dynamics.

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