English, Article, Journal or magazine article edition: The Impact of Financial Structure on Firms' Financial Constraints: A Cross-Country Analysis Christopher F. Baum; Dorothea Schäfer; Oleksandr Talavera

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Bookmark: http://trove.nla.gov.au/version/73742
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The Impact of Financial Structure on Firms' Financial Constraints : A Cross-Country Analysis
Author
  • Christopher F. Baum
  • Dorothea Schäfer
  • Oleksandr Talavera
Physical Description
  • preprint
Notes
  • 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 et al. (2004), a path-breaking 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, influences the cash flow sensitivity of cash of constrained firms but leaves 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 the constrained firms with easier access to external financing.
  • RePEc:boc:bocoec:690
  • 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.
  • financial constraints, financial system, cash flow sensitivity of cash
  • RePEc:diw:diwwpp:dp863
Language
  • English
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