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

  • SylvieCieply

    (IUP Banque Caen)

  • Bernard Paranque

    (Banque de France)

  • .

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://econwpa.repec.org/eps/fin/papers/9708/9708002.pdf
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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.
Contact details of provider: Web page: http://econwpa.repec.org

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  17. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  18. Augory, C. & Avouyi-Dovi, S. & Busque, P. & Queron, A., 1996. "Analyse macroeconomique de la situation financiere des PMI dans les annees quatre-vingt. Partie I : production, emploi, investissement et productivite," Papers 1996-01/e, Caisse des Depots et Consignations - Cahiers de recherche.
  19. Stephen D. Oliner & Glenn D. Rudebusch, 1995. "Is there a bank lending channel for monetary policy?," Economic Review, Federal Reserve Bank of San Francisco, pages 1-20.
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