Financial market development and corporate financing: evidence from emerging market economies
Purpose - The purpose of this paper is to examine the effects of financial market development on corporate financing of emerging market firms to ascertain whether or not interactions in the financial market has any impact on the available choice of financing of firms. Design/methodology/approach - Panel data covering the period 1990-2006 for 34 emerging market economies were analyzed within the framework of Pesaran's dynamic fixed effect model and the pooled mean group estimator to capture the short- and long-run effects of the covariates on the endogenous variables. Findings - The findings of the research indicate significantly that the direction and magnitude of the impact of financial market development and macroeconomic variables on capital structure vary with the maturities of the security issue. It is also documented that firm level variables such as profitability, investment opportunity, asset tangibility and risk are equally important in predicting firms' capital structure decisions. The findings also indicate that economy wide variables such as gross domestic product per capita are significant predictors of financing choices of firms. The results of the study generally support existing literature on the impact of financial market development, macroeconomic variables and certain firm level factors on capital structure. Originality/value - The paper considers unique data from emerging market economies over a 17-year period.
Volume (Year): 37 (2010)
Issue (Month): 1 (January)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/jes.htm Email:
When requesting a correction, please mention this item's handle: RePEc:eme:jespps:v:37:y:2010:i:1:p:96-116. 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: (Virginia Chapman)
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.