Advanced Search
MyIDEAS: Login to save this paper or follow this series

Financial Development and Allocation of External Finance

Contents:

Author Info

  • Jan Bena
  • Peter Ondko
Registered author(s):

Abstract

We examine whether financial systems facilitate efficient allocation of resources into perspective projects. Employing European micro-level data from 1996-2005, we show that firms in industries with the best growth opportunities use more external finance in financially more developed countries. The result is robust to controlling for technology determinants of external finance and to choosing different proxies for growth opportunities. We also find that the explanatory power of the technology determinants decreases significantly once growth opportunities are controlled for, which suggests that the often used measures of determinants of external finance are partly driven by growth opportunities.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cerge-ei.cz/pdf/wp/Wp398.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp398.

as in new window
Length:
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:cer:papers:wp398

Contact details of provider:
Postal: P.O. Box 882, Politickych veznu 7, 111 21 Praha 1
Phone: (+420) 224 005 123
Fax: (+420) 224 005 333
Email:
Web page: http://www.cerge-ei.cz
More information through EDIRC

Related research

Keywords: Financial development; external finance; allocative efficiency;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Geert Bekaert & Campbell R. Harvey & Christian Lundblad & Stephan Siegel, 2004. "Global Growth Opportunities and Market Integration," NBER Working Papers 10990, National Bureau of Economic Research, Inc.
  2. John H. Boyd & Edward C. Prescott, 1985. "Financial intermediary-coalitions," Staff Report, Federal Reserve Bank of Minneapolis 87, Federal Reserve Bank of Minneapolis.
  3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2001. "Government Ownership of Banks," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp01-016, Harvard University, John F. Kennedy School of Government.
  4. Cristina Arellano & Yan Bai & Jing Zhang, 2009. "Firm dynamics and financial development," Staff Report, Federal Reserve Bank of Minneapolis 392, Federal Reserve Bank of Minneapolis.
  5. Oivind Anti Nilsen & Fabio Schiantarelli, 1996. "Zeroes and Lumps in Investment: Empirical Evidence on Irreversibilities and Non-Convexities," Boston College Working Papers in Economics, Boston College Department of Economics 337., Boston College Department of Economics, revised 01 Nov 2000.
  6. Jan Bena & Stepan Jurajda, 2007. "Which Firms Benefit More from Financial Development?," CERGE-EI Working Papers, The Center for Economic Research and Graduate Education - Economic Institute, Prague wp330, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  7. Islam, Saiyid S. & Mozumdar, Abon, 2007. "Financial market development and the importance of internal cash: Evidence from international data," Journal of Banking & Finance, Elsevier, Elsevier, vol. 31(3), pages 641-658, March.
  8. Arturo Galindo & Fabio Schiantarelli & Andrew Weiss, 2002. "Does Financial Liberalization Improve the Allocation of Investment?: Micro Evidence from Developing Countries," IDB Publications 6496, Inter-American Development Bank.
  9. Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April.
  10. Raymond Fisman & Inessa Love, 2007. "Financial Dependence and Growth Revisited," Journal of the European Economic Association, MIT Press, MIT Press, vol. 5(2-3), pages 470-479, 04-05.
  11. Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, Elsevier, vol. 82(3), pages 591-629, December.
  12. Anna Ilyina & Roberto M. Samaniego, 2008. "Technology and Finance," IMF Working Papers, International Monetary Fund 08/182, International Monetary Fund.
  13. Abiad, Abdul & Oomes, Nienke & Ueda, Kenichi, 2008. "The quality effect: Does financial liberalization improve the allocation of capital?," Journal of Development Economics, Elsevier, Elsevier, vol. 87(2), pages 270-282, October.
  14. Jeffrey Wurgler, 1999. "Financial Markets And The Allocation Of Capital," Yale School of Management Working Papers, Yale School of Management ysm123, Yale School of Management, revised 01 Mar 2001.
  15. Ross Levine, 2004. "Finance and Growth: Theory and Evidence," NBER Working Papers 10766, National Bureau of Economic Research, Inc.
  16. Raghuram G. Rajan & Luigi Zingales, . "Financial Dependence and Growth," CRSP working papers, Center for Research in Security Prices, Graduate School of Business, University of Chicago 344, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  17. Malcolm Baker & Jeremy C. Stein & Jeffrey Wurgler, 2002. "When Does the Market Matter? Stock Prices and the Investsment of Equity-Dependent Firms," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1978, Harvard - Institute of Economic Research.
  18. Abdul Abiad & Nienke Oomes & Kenichi Ueda, 2004. "The Quality Effect," IMF Working Papers, International Monetary Fund 04/112, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Jerbashian, Vahagn & Kochanovay, Anna, 2012. "The impact of telecommunication technologies on competition in services and goods markets: Empirical evidence," 23rd European Regional ITS Conference, Vienna 2012, International Telecommunications Society (ITS) 60377, International Telecommunications Society (ITS).
  2. Purificacion Parrado-Martinez & Antonio Parta Ureña & Pilar Gomez Fernandez-Aguado, 2014. "Usefulness of Financial Soundness Indicators for risk assessment: The case of EU member countries," Working Papers, Universidad Pablo de Olavide, Department of Financial Economics and Accounting (former Department of Business Administration) 14.01, Universidad Pablo de Olavide, Department of Financial Economics and Accounting (former Department of Business Administration).
  3. Vahagn Jerbashian & Anna Kochanova, 2012. "The Impact of Telecommunication Technologies on Competition in Services and Goods Markets: Empirical Evidence," CERGE-EI Working Papers, The Center for Economic Research and Graduate Education - Economic Institute, Prague wp463, The Center for Economic Research and Graduate Education - Economic Institute, Prague.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cer:papers:wp398. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jana Koudelkova).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.