EconStor >
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin >
DIW-Diskussionspapiere >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/27386
  
Title:The impact of financial structure on firms' financial constraints: a cross-country analysis PDF Logo
Authors:Baum, Christopher F.
Schäfer, Dorothea
Talavera, Oleksandr
Issue Date:2009
Series/Report no.:Discussion papers // German Institute for Economic Research 863
Abstract:We estimate firms' cash flow sensitivity of cash to empirically test how the financial system's structure and activity level influence their financial constraints. For this purpose we merge Almeida, Campello and Weisbach (2004), a pathbreaking new design for evaluating a firm's financial constraints, with Levine (2002), who paved the way for comparative analysis of financial systems around the world. We conjecture that a country's financial system, both in terms of its structure and its level of development, should influence the cash flow sensitivity of cash of constrained firms but leave unconstrained firms unaffected. We test our hypothesis with a large international sample of 80,000 firm-years from 1989 to 2006. Our findings reveal that both the structure of the financial system and its level of development matter. Bank-based financial systems provide constrained firms with easier access to external financing.
Subjects:Financial constraints
financial system
cash flow sensitivity of cash
JEL:G32
G30
Document Type:Working Paper
Appears in Collections:DIW-Diskussionspapiere
Publikationen von Forscherinnen und Forschern des DIW

Files in This Item:
File Description SizeFormat
595251412.PDF195.96 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/27386

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.