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Firm Dynamics and Financial Development
[report]
2009
unpublished
This paper studies the impact of cross-country variation in financial market development on firms' financing choices and growth rates using comprehensive firm-level datasets. We document that in less financially developed economies, small firms grow faster and have lower debt to asset ratios than large firms. We then develop a quantitative model where financial frictions drive firm growth and debt financing through the availability of credit and default risk. We parameterize the model to the
doi:10.3386/w15193
fatcat:ziw3ptqc4nfurhhcbejmnvwyzm