publication . Research . Article . 2013

Corporate Investments in Asian Emerging Markets: Financial Conditions, Financial Development, and Financial Constraints

Noli R. Sotocinal; Maria Socorro Gochoco-Bautista; Jianxin Wang;
Open Access English
  • Published: 01 Jan 2013
  • Publisher: Manila: Asian Development Bank (ADB)
Abstract
Motivated by the literature on the finance–growth nexus, this paper explores the mechanisms through which finance affects corporate investments and capital accumulation. We separate the effects of financial conditions from those of financial development. Based on a sample of firms from five Asian emerging economies, we find that (1) financial conditions and financial development affect corporate investments through different channels. Financial conditions affect firms' growth opportunities and investment demand. Financial development primarily affects firms' external financing constraints. (2) Large firms benefit more from improved financial conditions, while sm...
Subjects
free text keywords: corporate investments, investment sensitivity to cash flows, financial condition index, financial development index, financial constraints, ddc:330, Financial ratio, Financial system, Geography of finance, Financial analysis, Finance, business.industry, business, Market data, Position (finance), Financial intermediary, Financial market participants, Indirect finance
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