Narrow Results

The purpose of this paper is to examine the determinants of Taiwan's manufacturing firm growth, in particular, the effects of financial structure, corporate financing choices and Taiwanese outward FDI in China on firm growth in different industries besides other physical factors discussed in the literature. We construct an unbalanced dynamic panel data using 280 listed and OTC manufacturing firms over the period 1991–2002. The empirical method utilized is the generalized method of moments (GMM) proposed by Arellano and Bond (1991). Our results find that (1) the growth rates of firms are positively related to firm size, age, capital intensity, lagged R&D, export ratio, investment ratio, and profits; (2) high debt-to-equity ratio is associated with low corporation growth, while high return on total assets is associated with high corporation growth, which reflects that a firm with a relatively sound financial structure will facilitate their growth; (3) higher liquidity of stock market relative to the banking sector lead to higher growth of firms. However, larger size of stock market relative to the banking sector leads to lower the firm's growth, i.e., the smaller the indirect finance, the lower the firm growth; (4) firms engaged in FDI toward China might be hollowing-out; (5) individual firms that could be financed more from either bank or equity market will enjoy higher rates of growth compared to others in the same industries, but, those effects on traditional and basic industries are weaker; (6) high bank-financing ratio and internal financing are associated with higher firm growth, while firms using more bonds or equity financing tend to experience lower growth. However, the net positive effects of equity financing on traditional and basic firm growth are significantly greater.

This study utilizes the Korean-American and Mexican-American samples in the National Minority Business Survey to examine the debt structure of small businesses owned by individuals from these ethnic groups. Small business owners with higher household net worth were more likely to borrow from finance companies, friends, and credit card companies. When controlling for business, business owner and family characteristics, Mexican-American small business owners with high net worth were significantly more likely to borrow from commercial banks than Mexican-American small business owners with low net worth are. Korean-American small business owners with high net worth were significantly more likely to utilize family loans than Korean-American small business owners with low net worth are. Korean-American small businesses appeared to be more financially dependent on the financial strength of their community, while Mexican-American small businesses owners appeared to be more financially independent.

Based on their perceptions, more than three quarters of Moroccan manufacturing firms have identified access to finance as one of the major constraints affecting their performance. However, compared to a number of emerging countries, Moroccan firms appear relatively undercapitalized and more reliant on external finance. These two findings seem contradictory and have very different policy implications. The purpose of this paper is to provide a rigorous understanding of the rationale behind financial choices made by Moroccan firms, and assess the severity of financial constraints they effectively face. The paper uses a panel dataset covering 550 non-listed manufacturing firms over the period 1998ȓ2003 and investigates both long-term and short-term measures of leverage with the objective of understanding the factors that shape "debt-equity choice" as well as "debt maturity structure".

Our analysis reveals the existence of a negative relationship between asset tangibility and both aggregate leverage and short-term debt ratio. However, no clear cut relationship between asset tangibility and long-term debt is uncovered. Small firms tend to increase their debt instead of opening their capital to outside investors and larger firms seem to rely much more on their retained earnings for their long-term financial needs. For short-term debt, size does not appear to matter. The impact of growth is positive on short-term leverage and irrelevant for long-term leverage. Finally, profitability exerts a positive effect on long-term leverage and a negative one on short-term leverage.

This paper investigates the effect of within banking sector competition and competition from financial markets on the dynamics of the transmission from monetary policy rates to retail bank interest rates in the euro area. We use a new dataset that permits analysis for disaggregated bank products. Using a difference-in-difference approach, we test whether development of financial markets and financial innovation speed up the pass through. We find that more developed markets for equity and corporate bonds result in a faster pass-through for those retail bank products directly competing with these markets. More developed markets for securitized assets and for interest rate derivatives also speed up the transmission. Further, we find relatively strong effects of competition within the banking sector across two different measures of competition. Overall, the evidence supports the idea that developed financial markets and competitive banking systems increase the effectiveness of monetary policy.

We test whether the relationship between finance and growth is present in 48 countries over 20 different periods of an equal length of 15 years, starting in 1980 (to 1995) and ending in 1999 (to 2014). We estimate growth regressions using an IV approach and we find that (1) overall financial development had a positive effect on economic growth for almost all our studied periods, (2) the legal system is the primary determinant of the effectiveness of the overall financial system, and (3) financial services were relevant for economic growth even during the financial crisis of 2008. This research is part of a research agenda revisiting the finance–growth nexus using up-to-date empirical methodologies.