Discussion Paper Details

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Title: Which Firms Benefit More from Financial Development?

Author(s): Jan Bena and Stepan Jurajda

Publication Date: July 2007

Keyword(s): Corporate growth, Financial development and Information Asymmetry

Programme Area(s): Financial Economics

Abstract: We test whether more developed financial systems are better at tackling asymmetric information proxied by firm age and size. Comparing the growth effect of financial development (FD) across firms of different type, we find that FD disproportionately fosters the growth of young companies, while there is relatively little evidence of differences in the effect across firms of different size. The disproportionate gains from FD for youngest firms are concentrated among firms with lower shares of equity capital on total assets as these firms are in more need of external financing.

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Bibliographic Reference

Bena, J and Jurajda, S. 2007. 'Which Firms Benefit More from Financial Development?'. London, Centre for Economic Policy Research.