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The Financing and Growth of Firms in China and India: Evidence from Capital Markets

  • Sergio Schmukler

    (World Bank)

  • Tatiana Didier

    (World Bank)

We study the extent to which firms from China and India use capital markets to obtain financing and grow. Using a unique data set on domestic and international capital raising activity and performance, we find that the expansion of financial market activity since the 1990s has been much more limited than the aggregate figures suggest. Relatively few firms raise capital and even fewer firms capture the bulk the financing. Moreover, firms that issue equity or bonds are different and behave differently from other publicly listed firms. Among other things, firms that raise capital are on average larger and grow faster. The differences between users and non-users exist before capital raisings, are associated with the probability of raising capital, and become more accentuated afterwards. The distribution of issuing firms shifts more over time than the distribution of those that do not issue, suggesting little convergence in firm size among listed firms.

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Paper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 98.

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Date of creation: 2013
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Handle: RePEc:red:sed013:98
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