Financial Development and Financing Constraints : International Evidence from the Structural Investment Model
The relationship between the financial, and real sides of the economy has long been a topic of intense interest, and debate. The author provides microeconomic evidence that financial development aids growth, by reducing financing constraints that w...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2001/10/1615068/financial-development-financing-constraints-international-evidence-structural-investment-model http://hdl.handle.net/10986/19513 |
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okr-10986-195132021-04-23T14:03:43Z Financial Development and Financing Constraints : International Evidence from the Structural Investment Model Love, Inessa ACCOUNTING ASYMMETRIC INFORMATION BUSINESS CYCLES CAPITAL ACCUMULATION CAPITAL ALLOCATION CAPITAL MARKETS CAPITALIZATION CONSTANT RETURNS TO SCALE COST OF CAPITAL DEBT DEMAND ELASTICITY DISCOUNT RATE DISCOUNT RATES DISCOUNTED VALUE DIVIDENDS ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMICS ECONOMISTS ELASTICITY EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXTERNAL FINANCING FINANCIAL DECISIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL SECTOR FIXED COSTS FUTURE RESEARCH GDP INFORMATION ASYMMETRIES INTANGIBLE ASSETS INTEREST RATE LESS DEVELOPED COUNTRIES LIQUID ASSETS LIQUIDITY M3 MARGINAL COST MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARKET POWER MARKETABLE SECURITIES MERGERS NET WORTH NPV OPTIMIZATION PERFECT COMPETITION PRESENT VALUE PRODUCTION FUNCTION PROFIT MAXIMIZATION RATIONAL EXPECTATIONS REGRESSION ANALYSIS SAVINGS SECURITIES THEORETICAL MODELS VALUE ADDED VARIABLE COSTS The relationship between the financial, and real sides of the economy has long been a topic of intense interest, and debate. The author provides microeconomic evidence that financial development aids growth, by reducing financing constraints that would otherwise restrict efficient firm investment. The author estimates a structural model, based on the Euler equation for investment, using firm-level data from forty countries. The results show a strong negative relationship between the extent of financial market development, and the sensitivity of investment, to the availability of internal funds (a proxy for financing constraints). Considering size effects, business cycles, and the legal environment as plausible alternative explanations, the author finds the results to be robust in all cases. 2014-08-20T19:34:43Z 2014-08-20T19:34:43Z 2001-10 http://documents.worldbank.org/curated/en/2001/10/1615068/financial-development-financing-constraints-international-evidence-structural-investment-model http://hdl.handle.net/10986/19513 English en_US Policy Research Working Paper;No. 2694 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING ASYMMETRIC INFORMATION BUSINESS CYCLES CAPITAL ACCUMULATION CAPITAL ALLOCATION CAPITAL MARKETS CAPITALIZATION CONSTANT RETURNS TO SCALE COST OF CAPITAL DEBT DEMAND ELASTICITY DISCOUNT RATE DISCOUNT RATES DISCOUNTED VALUE DIVIDENDS ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMICS ECONOMISTS ELASTICITY EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXTERNAL FINANCING FINANCIAL DECISIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL SECTOR FIXED COSTS FUTURE RESEARCH GDP INFORMATION ASYMMETRIES INTANGIBLE ASSETS INTEREST RATE LESS DEVELOPED COUNTRIES LIQUID ASSETS LIQUIDITY M3 MARGINAL COST MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARKET POWER MARKETABLE SECURITIES MERGERS NET WORTH NPV OPTIMIZATION PERFECT COMPETITION PRESENT VALUE PRODUCTION FUNCTION PROFIT MAXIMIZATION RATIONAL EXPECTATIONS REGRESSION ANALYSIS SAVINGS SECURITIES THEORETICAL MODELS VALUE ADDED VARIABLE COSTS |
| spellingShingle |
ACCOUNTING ASYMMETRIC INFORMATION BUSINESS CYCLES CAPITAL ACCUMULATION CAPITAL ALLOCATION CAPITAL MARKETS CAPITALIZATION CONSTANT RETURNS TO SCALE COST OF CAPITAL DEBT DEMAND ELASTICITY DISCOUNT RATE DISCOUNT RATES DISCOUNTED VALUE DIVIDENDS ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMICS ECONOMISTS ELASTICITY EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXTERNAL FINANCING FINANCIAL DECISIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL SECTOR FIXED COSTS FUTURE RESEARCH GDP INFORMATION ASYMMETRIES INTANGIBLE ASSETS INTEREST RATE LESS DEVELOPED COUNTRIES LIQUID ASSETS LIQUIDITY M3 MARGINAL COST MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARKET POWER MARKETABLE SECURITIES MERGERS NET WORTH NPV OPTIMIZATION PERFECT COMPETITION PRESENT VALUE PRODUCTION FUNCTION PROFIT MAXIMIZATION RATIONAL EXPECTATIONS REGRESSION ANALYSIS SAVINGS SECURITIES THEORETICAL MODELS VALUE ADDED VARIABLE COSTS Love, Inessa Financial Development and Financing Constraints : International Evidence from the Structural Investment Model |
| relation |
Policy Research Working Paper;No. 2694 |
| description |
The relationship between the financial,
and real sides of the economy has long been a topic of
intense interest, and debate. The author provides
microeconomic evidence that financial development aids
growth, by reducing financing constraints that would
otherwise restrict efficient firm investment. The author
estimates a structural model, based on the Euler equation
for investment, using firm-level data from forty countries.
The results show a strong negative relationship between the
extent of financial market development, and the sensitivity
of investment, to the availability of internal funds (a
proxy for financing constraints). Considering size effects,
business cycles, and the legal environment as plausible
alternative explanations, the author finds the results to be
robust in all cases. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Love, Inessa |
| author_facet |
Love, Inessa |
| author_sort |
Love, Inessa |
| title |
Financial Development and Financing Constraints : International Evidence from the Structural Investment Model |
| title_short |
Financial Development and Financing Constraints : International Evidence from the Structural Investment Model |
| title_full |
Financial Development and Financing Constraints : International Evidence from the Structural Investment Model |
| title_fullStr |
Financial Development and Financing Constraints : International Evidence from the Structural Investment Model |
| title_full_unstemmed |
Financial Development and Financing Constraints : International Evidence from the Structural Investment Model |
| title_sort |
financial development and financing constraints : international evidence from the structural investment model |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/10/1615068/financial-development-financing-constraints-international-evidence-structural-investment-model http://hdl.handle.net/10986/19513 |
| _version_ |
1764439924589723648 |