Financial constraints and firm Dynamics

Giulio Bottazzi, Angelo Secchi and Federico Tamagni

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This study analyzes the effect of financial constraints (FCs) on firm dynamics. We measure FCs with an official credit rating, which captures availability and cost of external resources. We find that FCs undermine average firm growth, induce anti-correlation in growth patterns, and reduce the dependence of growth volatility on size. FCs are also associated with higher volatility and asymmetries in growth shock distributions, preventing young fast-growing firms especially from seizing attractive growth opportunities and further deteriorating the growth prospects of already slow-growing firms, particularly if old. The sub-diffusive nature of the growth process of constrained firms is compatible with the distinctive properties of their size distribution.

Keywords: contraintes; financières (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (69)

Published in Small Business Economics, 2014, 42, pp.99-116. ⟨10.1007/s11187-012-9465-5⟩

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Related works:
Journal Article: Financial constraints and firm dynamics (2014)
Working Paper: Financial constraints and firm Dynamics (2014)
Working Paper: Financial constraints and firm Dynamics (2014)
Working Paper: Financial Constraints and Firm Dynamics (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-00976545

DOI: 10.1007/s11187-012-9465-5

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