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Which Firms Benefit More from Financial Development?

Author

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  • Jan Bena
  • Stepan Jurajda

Abstract

We exploit the substantial diversity in financial development of the 'single-market' EU- 15 economies to test whether more developed financial systems are better at tackling asymmetric information proxied by firm age and size. Comparing the growth effect of financial development across firms of different type, we find that financial development disproportionately fosters the growth of young—but not the youngest—companies, while there is relatively little evidence of differences in the effect across firms of different size.

Suggested Citation

  • Jan Bena & Stepan Jurajda, 2007. "Which Firms Benefit More from Financial Development?," CERGE-EI Working Papers wp330, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp330
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    Cited by:

    1. Bena, Jan & Ondko, Peter, 2012. "Financial development and the allocation of external finance," Journal of Empirical Finance, Elsevier, vol. 19(1), pages 1-25.
    2. Jan Bena, 2008. "The Effect of Credit Rationing on the Shape of the Competition-Innovation Relationship," CERGE-EI Working Papers wp377, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Nenavath Sreenu, 2019. "An Econometric Time-Series Analysis of the Dynamic Relationship among Trade, Financial Development and Economic Growth in India," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(2), pages 155-165, February.
    4. Raghutla CHANDRASHEKAR & T. SAMPATH & Krishna Reddy CHITTEDI, 2018. "Financial development, trade openness and growth in India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(614), S), pages 113-124, Spring.
    5. Dick Wensveen, 2008. "Notes And Communications," De Economist, Springer, vol. 156(3), pages 307-338, September.

    More about this item

    Keywords

    Financial development; corporate growth; information asymmetry.;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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