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French manufacturing firms and the capital gap since1985 - a credit rationing approach

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Author Info

  • SylvieCieply

    (IUP Banque Caen)

  • Bernard Paranque

    (Banque de France)

  • .

Abstract

s: An earlier study (Cieply, Paranque, 1996) revealed the existence of a size effect in the determination of the financial structures of French firms over the period 1990-1993. However, this effect only appeared clearly above the 2000 employee threshold and was not sufficient to identify the dominant factors explaining the financial structures observed. We therefore turned to a model that included the determinants of the demand for and supply of financial debt. The main findings of this research are: the importance of credit rationing by demand over the period as a whole and across the population of firms; the absence of any effect of substitution of debt to suppliers for debt to financial institutions, perhaps due to a lack of information about the customers of firms subject to credit rationing by supply; the high frequency of firms with financial links subject to credit rationing by supply, which doubtless corresponds to specific methods for managing cash balances and the production cycle; the fact that listed firms are more often in equilibrium than other firms. The hypothesis of a small business capital gap is borne out only for the smallest businesses, especially as regards long-term debt. However, this finding is not entirely clear-cut. Lastly, the prevalence of each configuration seems to depend more on the movement of interest rates than on their spread.

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File URL: http://128.118.178.162/eps/fin/papers/9708/9708002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Finance with number 9708002.

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Length: 38 pages
Date of creation: 27 Aug 1997
Date of revision: 29 Oct 2000
Handle: RePEc:wpa:wuwpfi:9708002

Note: pdf, 38 pages, withe charts and tables.
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Web page: http://128.118.178.162

Related research

Keywords: credit rationning; liste; unlisted; size; sme's; capital gap;

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References

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  1. Mark Gertler & Simon Gilchrist, 1993. "The role of credit market imperfections in the monetary transmission mechanism: arguments and evidence," Finance and Economics Discussion Series 93-5, Board of Governors of the Federal Reserve System (U.S.).
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  5. Hancké, Bob & Cieply, Sylvie, 1996. "Bridging the finance gap for small firms. The role of information flows across large firm-based production networks in supplying finance to small firms: the case of France," Discussion Papers, Research Unit: Economic Change and Employment FS I 96-311, Social Science Research Center Berlin (WZB).
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Cited by:
  1. Goldbach, Stefan, 2012. "Innovation and Education: Is there a ‘Nerd Effect’?," Darmstadt Discussion Papers in Economics 56008, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).

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