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Firm Size and Credit in Argentina

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  • Sebastian Auguste
  • Ricardo N. Bebczuk
  • Gabriel Sanchez

Abstract

The goal of this paper is to study the link between bank credit (and internal funding) and average firm size in Argentina. Besides the fact that economic growth tends to go hand in hand with larger firm size, the topic is of particular interest because of the severe credit crunch in Argentina in the aftermath of the 2001-2002 financial crisis. To this end, a novel three-digit industry-level dataset spanning the 2000-2010 period was constructed. The results confirm the expected positive impact of credit supply on average firm size. Furthermore, the study expands on common knowledge by testing the sensitivity of firm size to internal funding and the differential financing behavior of the primary and the manufacturing sector. The results do not seem to be driven by endogeneity bias.

Suggested Citation

  • Sebastian Auguste & Ricardo N. Bebczuk & Gabriel Sanchez, 2013. "Firm Size and Credit in Argentina," Research Department Publications IDB-WP-396, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:idb-wp-396
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    References listed on IDEAS

    as
    1. Paolo Angelini & Andrea Generale, 2008. "On the Evolution of Firm Size Distributions," American Economic Review, American Economic Association, vol. 98(1), pages 426-438, March.
    2. Guillermo A. Calvo & Alejandro Izquierdo & Ernesto Talvi, 2006. "Phoenix Miracles in Emerging Markets: Recovering without Credit from Systemic Financial Crises," Research Department Publications 4474, Inter-American Development Bank, Research Department.
    3. Krishna B. Kumar & Raghuram G. Rajan & Luigi Zingales, "undated". "What Determines Firm Size?," CRSP working papers 496, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    4. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2010. "Formal versus Informal Finance: Evidence from China," The Review of Financial Studies, Society for Financial Studies, vol. 23(8), pages 3048-3097, August.
    5. Nada Oulidi & Laurence Allain, 2009. "Credit Market in Morocco: A Disequilibrium Approach," IMF Working Papers 2009/053, International Monetary Fund.
    6. Mr. Luis Catão, 1997. "Bank Credit in Argentina in the Aftermath of the Mexican Crisis: Supply or Demand Constrained?," IMF Working Papers 1997/032, International Monetary Fund.
    7. Frank Packer & Haibin Zhu, 2012. "Loan loss provisioning practices of Asian banks," BIS Working Papers 375, Bank for International Settlements.
    8. Joseph P.H. Fan & Sheridan Titman & Garry Twite, 2010. "An International Comparison of Capital Structure and Debt Maturity Choices," NBER Working Papers 16445, National Bureau of Economic Research, Inc.
    9. Bebczuk,Ricardo N., 2003. "Asymmetric Information in Financial Markets," Cambridge Books, Cambridge University Press, number 9780521793421.
    10. Coremberg, Ariel Alberto, 2009. "Midiendo las fuentes del crecimiento en una economía inestable: Argentina. Productividad y factores productivos por sector de actividad económica y por tipo de activo," Estudios y Perspectivas – Oficina de la CEPAL en Buenos Aires 41, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Feldstein, Martin, 2002. "Argentina's Fall: Lessons from the Latest Financial Crisis," Scholarly Articles 2959849, Harvard University Department of Economics.
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    Cited by:

    1. Chisari, Omar O. & Miller, Sebastián J., 2014. "Does Firm Heterogeneity Impact the Effectiveness of Carbon Taxes? Experiments in Argentina and Mexico," IDB Publications (Working Papers) 6606, Inter-American Development Bank.

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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