Financing Patterns Around the World: The Role of Institutions

By Thorsten Beck, Asli Demirgüç-Kunt, Vojislav Maksimovic. 2002

128 citations recorded by the source corpus.

Using a firm-level survey database covering 48 countries, the authors investigate whether differences in financial and legal development affect the way firms finance their investments. The results indicate that external financing of investments is not a function of institutions, although the form of external finance is. The authors identify two explanations for this. First, legal and financial institutions affect different types of external finance in offsetting ways. Second, firm size is an important determinant of whether firms can have access to different types of external finance. Larger firms with financing needs are more likely to use external finance compared with small firms. The results also indicate that these firms are more likely to use external finance in more developed financial systems, particularly debt and equity finance. The authors also find evidence consistent with the pecking order theory in financially developed countries, particularly for large firms.

Subfields: Accounting, Information Systems

View Paper: https://www.semanticscholar.org/paper/4548d04c3b80f94f060475902a0b24d66264db34

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Citations in the corpus

Trade Credit, Relationship-specific Investment, and Product Market Power (2015, background): “The value of B’s output depends on the quality of the input i.e., whether A has made the appropriate RSI.”
The Determinants of Capital Structure: Evidence from the Asia Pacific Region * (2004, background): “With respect to financing patterns, Beck et al. (2002) show that firms in more developed countries have better access to external finance.”