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Which Firms Benefit More from Financial Development?

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  • Bena, Jan
  • Jurajda, Stepan

Abstract

We 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 (FD) across firms of different type, we find that FD disproportionately fosters the growth of young companies, while there is relatively little evidence of differences in the effect across firms of different size. The disproportionate gains from FD for youngest firms are concentrated among firms with lower shares of equity capital on total assets as these firms are in more need of external financing.

Suggested Citation

  • Bena, Jan & Jurajda, Stepan, 2007. "Which Firms Benefit More from Financial Development?," CEPR Discussion Papers 6392, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6392
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    Cited by:

    1. repec:agr:journl:v:1(614):y:2018:i:1(614):p:113-124 is not listed on IDEAS
    2. Dick Wensveen, 2008. "Notes And Communications," De Economist, Springer, vol. 156(3), pages 307-338, September.
    3. Jan Bena & Peter Ondko, 2009. "Financial Development and Allocation of External Finance," CERGE-EI Working Papers wp398, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    4. 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.

    More about this item

    Keywords

    Corporate growth; Financial development; Information Asymmetry;

    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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