Causes and Effects of Financing Constraints at the Firm Level

Causes and Effects of Financing Constraints at the Firm Level This paper focuses on the empirical assessment of determinants and effects of financing constraints at the firm level. Using a standard model of credit rationing based on asymmetric information firm age and size are found to be factors which should influence the probability of financing constraints. Improving business conditions strengthen the degree of informational asymmetry. A unique panel of firm data for Germany, including direct information on financing constraints, is used for the econometric analysis. Firms' size and improving business conditions are found to have a significant effect. Furthermore, a significant impact on investment and R&D expenditures cannot be rejected. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Causes and Effects of Financing Constraints at the Firm Level

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Publisher
Springer Journals
Copyright
Copyright © 1999 by Kluwer Academic Publishers
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1023/A:1008035826914
Publisher site
See Article on Publisher Site

Abstract

This paper focuses on the empirical assessment of determinants and effects of financing constraints at the firm level. Using a standard model of credit rationing based on asymmetric information firm age and size are found to be factors which should influence the probability of financing constraints. Improving business conditions strengthen the degree of informational asymmetry. A unique panel of firm data for Germany, including direct information on financing constraints, is used for the econometric analysis. Firms' size and improving business conditions are found to have a significant effect. Furthermore, a significant impact on investment and R&D expenditures cannot be rejected.

Journal

Small Business EconomicsSpringer Journals

Published: Sep 30, 2004

References

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