Access to finance,foreign ownership and foreign takeovers in Germany

With this article we present the first microeconometric analysis of the impact of a foreign acquisition on the target firm’s access to finance. By using a large database of German firms, we furthermore investigate for the first time the link between foreign ownership and access to finance in Germany, one of the world's leading target countries for FDI. We use newly available comprehensive panel data that we constructed from information collected by the German statistical offices and from credit rating scores supplied by the leading German credit rating agency. We find foreign-owned firms in German manufacturing on average to show slightly more financing restrictions than domestically owned enterprises, but this very small difference diminishes once unobserved heterogeneity is taken into account. We further demonstrate that one reason for this finding is the preference of foreign investors for targets with relatively low credit-worthiness. Although the likelihood of a foreign acquisition appears to be correlated with credit rating, there is no impact of foreign takeovers on the credit constraints of the target firms ex post and therefore no support for the hypothesis that foreign takeovers ease financial frictions.     

Access to credit and investment decisions of small‐ and medium‐sized enterprises in China

Financial constraints are common in developing countries where financial systems are underdeveloped. In China, firms report that access to finance is the most important obstacle in the business environment. This is related to firms that fail to gain access to the credit market. We examine the likelihood of gaining access to credit by firms, and find that size and exporting appear to be the key characteristics. Credit constraints are significant for investment decisions. Together with size, access to credit is among the firm characteristics with the greatest impact on the likelihood to invest.     

Financial sector opening and financial constraints: an empirical study based on China’s experiences

ABSTRACT

The paper investigates the effect of financial sector opening on financial constraints based on the experiences in China. We firstly review the policy of China’s financial sector opening and set up exogenous policy measures. Then based on the panel data of listed firms from 2010 to 2015, we calculate four indices to measure China’s firm-level financial constraints through internal and external finance channels. We find that China’s financial sector opening alleviates financial constraints and upgrades the financing structure for China’s listed firms. Financial sector opening also eliminates ownership discrimination and promotes financing efficiency, to alleviate financial constraints of private enterprises and profitable enterprises. The mechanism of the effects of financial sector opening on financial constrain is mainly through the collateral channels and the elimination of information asymmetry.     

Does formal financial development crowd in informal financing? Evidence from Chinese private enterprises

The relationship between formal and informal finance is uncertain. They serve as substitute for high-quality borrowers but are complement for low-quality borrowers. As formal financial institutions expand, they may concentrate on high-quality borrowers or diversify among borrowers of different qualities. Using unique survey data from Chinese private firms, we are allowed to investigate the relationship for a group of borrowers who were considered as low-quality. We find that formal financial development imposes a crowd-in effect for private firms’ informal financing, especially in East China. There is heterogeneity between East and West China. We document that the crowd-in effect is greater for private firms with bank access or of large size.     

Financial Dependence and International Trade

Does financial development translate into a comparative advantage in industries that use more external finance? The author uses industry‐level data on firms’ dependence on external finance for 36 industries and 56 countries to examine this question. It is shown that countries with better‐developed financial systems have higher export shares and trade balances in industries that use more external finance. These results are robust to the use of alternative measures of external dependence and financial development and are not due to reverse causality or simultaneity bias.     

Firm growth and liquidity constraints: evidence from the manufacturing and service sectors in Italy

We use a large firm-level panel data set to analyse the relevance of liquidity constraints on firm growth in Italy. In most European countries, mainstream financial institutions are scantly able to provide affordable credit facilities to small firms. Thus, these firms are forced to finance their growth almost exclusively through retained earnings. We estimate a dynamic version of Gibrat-law, incorporating cash flow as a measure of financial constraints, for two different size classes within small and medium size enterprises and for several industries in manufacturing and service sectors. The findings show that, in general, small manufacturing firms have higher growth-cash flow sensitivities with respect to medium firms. Conversely, our results highlight, for the services, a significant heterogeneity in the impact of liquidity constraints on firm growth. In particular, the sensitivity of growth rates to the cash flow appears relatively high for small firms belonging to Knowledge Intensive Business Services. Validation of Gibrat-law in the services suggests that an important group of industries, with a superior capacity of encouraging firm’s competitiveness, need more financial resources to promote their growth and that of the manufacturing sectors with whom they are connected.     

Ownership structure and investment finance in transition economiesA survey of evidence from large firms in Hungary and Poland1

Using survey data on 157 large private Hungarian and Polish companies this paper investigates links between ownership structures and CEOs’ expectations with regard to sources of finance for investment. The Bayesian estimation is used to deal with the small sample restrictions, while classical methods provide robustness checks. We found a hump‐shaped relationship between ownership concentration and expectations of relying on public equity. The latter is most likely for firms where the largest investor owns between 25 percent and 49 percent of shares, just below the legal control threshold. More profitable firms rely on retained earnings for their investment finance, consistent with the ‘pecking order’ theory of financing. Finally, firms for which the largest shareholder is a domestic institutional investor are more likely to borrow from domestic banks.     

State-owned enterprises going public The case of China

Public listing is a key reform measure for large state‐owned enterprises (SOEs) in China. We find evidence that public listing lowers state ownership significantly, lessens firms’ reliance on debt finance, and allows firms to increase capital expenditure, at least temporarily. We also find that ownership structure affects post‐listing performance. However, we find no statistical evidence of a positive effect of public listing on firms’ profitability. We suggest alternative interpretations of the last finding.     

Financial factors and the margins of trade: Evidence from cross-country firm-level data

Using a large cross-country, firm-level database containing 5000 firms in 9 developing and emerging economies, we study how financial factors affect both firms' export decisions and the amount exported by firms. First, our results highlight the importance of the impact of firms' access to finance on their entry decision into the export market. However, better financial health neither increases the probability of remaining an exporter once the firm has entered, nor the size of exports. Second, we find that financial constraints create a disconnection between firms' productivity and their export status: productivity is only a significant determinant of the export decision if the firm has a sufficient access to external finance. Finally, an increase in a country's financial development dampens this disconnection, thus acting both on the number of exporters and on the exporters' selection process. These results contribute to the literature documenting the role of fixed costs and of the extensive margin of trade in total trade adjustment, and provide micro-level evidence of the positive impact of financial development on trade found by previous literature.     

The dynamic adjustment towards target capital structures of firms in transition economies*

We examine the capital structure dynamics of Central and Eastern European firms to get a better understanding of the quantitative and qualitative development of the financial systems in this region. The dynamic model used endogenizes the target leverage as well as the adjustment speed. It is applied to microeconomic data for ten countries. We find that during the transition process, firms generally increased their leverage, lowering the gap between the actual and the target leverage. Profitability and age are the most robust determinants of capital structure targets. Although banking system development has in general enabled firms to get closer to their leverage targets, information asymmetries between firms and banks are still relatively large. As a result, firms prefer internal finance above bank debt and adjust leverage only slowly.     

融资约束限制中国企业出口参与吗?

中国贸易增长模式的转变有赖于企业出口的扩展边际,而企业的出口参与行为取决于异质性。本文基于新新贸易理论,运用世界银行投资环境调查数据,使用probit模型重点考察了企业融资约束异质性对中国企业出口可能性的影响。研究结果表明,外源融资约束是限制企业出口参与的重要因素。进一步,本文发现企业出口参与对外源融资约束的依赖程度因所有制不同存在差异。国有企业和外资企业外源融资约束对出口参与的影响不显著;而民营企业外源融资约束对其出口参与起到显著的作用。另外,区分出口企业类型的检验结果显示,外源融资约束限制了企业的初始出口,而对于保持出口商地位的作用并不明显。     

Fuelled Power: Oil,Financiers and Central Bank Policy in Nigeria

While the literature on business power and global finance has illuminated the ways in which financial institutions limit the policy autonomy of states in developing countries, we know much less about the circumstances under which the power of financiers is undermined. In this article, I advance explanations of these circumstances by arguing that state access to natural resource revenues reduces the power of financial institutions and enhances the capacity of the state to pursue central bank policies which violate the interests of major financiers. I employ a case study of central bank policy in Nigeria to probe this argument and find evidence that supports the claim that whenever the Nigerian government's access to resource revenues increased, the state's capacity to diverge from financiers’ preferred central bank policies and to advance its own preferences increased as well. The analysis provides the basis for broader propositions about the policy space of developing countries vis-à-vis financial institutions and the variability of structural power.     

Bank versus nonbank financial institution lending behaviour: indictors of firm size,risk or ownership?

Using 1251 matched commercial loan deal terms of listed companies over the period 2003–2014, we examine the heterogeneity of lending behaviours of bank and nonbank financial institutions. The results show that large firms have a higher likelihood of getting loans from nonbank financial institutions. Compared to banks, nonbank financial institutions are more likely to provide credit help to high operation risk firms. State-owned listed firms have a higher probability to get finance from nonbank financial institutions than private firms, which highlights the situation that private firms are in a weak position to get credit help from China’s financial system. Moreover, the process of increasing the banks’ noninterest income ratio tends to drives firms to borrow from nonbank financial institutions.     

Financial structure and diversification of European firms

Small and medium enterprises have been shown to rely mainly on banks for funding and, unlike larger firms, rarely have direct access to capital markets. This article looks at the extent to which SMEs avail of a wider range of funding options and how their use differs across firms and countries. Across all countries, we find that firms are currently using two or three sources of finance to fund their operations and have had previous experience of other types of funding. There are some noticeable differences across countries with peripheral economies generally being less diversified. Differences across firm size and age groups are more marked than cross-country variation, with smaller and younger firms significantly more reliant on a limited set of finance types and older, larger firms having more diversified financial structures. Looking at individual sources of financing, we find that trade credit and informal sources of finance are extremely prevalent across all countries, with Irish firms being particularly likely to use them as sources of funding.     

Restructuring outcomes and the evolution of ownership patterns in Central and Eastern Europe

This paper begins from the proposition that ‘deep restructuring’ requires both finance and managerial expertise. It addresses the question of how this second stage of enterprise restructuring will come about in the majority of state-owned or former state-owned firms that are not owned by foreigners. In particular, it seeks to identify how the initial post-privatization ownership and control structure impinges on the likelihood that deep restructuring takes place. Conclusions for the design of privatization policy are drawn. The initial post-privatization ownership structures in the Visegrad countries and Russia are surveyed along with evidence of the transfer of ownership from insiders to outsiders.     

Investment climate,foreign networks and exporting – evidence from Africa

This paper investigates the impact of investment climate variables and foreign networks on the exporting decisions of African firms. We use data from the World Bank Investment Climate Surveys for over 7000 firms in 24 Sub-Saharan African countries. The results highlight the crucial role of the access to, and the quality of, investment climate characteristics – infrastructure, external finance and telecommunications for Sub-Saharan African firms’ exporting propensities. Our results show that improving the investment climate to the level of best performers in the sample will considerably increase the propensity of domestic firms to export. The paper also finds that foreign networks have a significantly positive impact on firms’ export propensities.     

融资约束与企业出口行为:基于工业企业数据的经验研究

采用2000—2007年的3万多家工业企业数据,本文构造了包括内源融资、商业信贷以及企业信用特征等变量的企业融资约束综合指标。基于Heckman选择模型的经验研究表明,企业融资状况的改善不仅能提高企业出口的概率,而且对其出口规模也有重要影响。研究还发现融资状况改善对外资企业出口影响最显著;与国有企业相比,民营企业虽受到更严重的融资约束,但其出口表现并未更差。此外,融资状况改善对那些高外源融资依赖度行业的企业出口具有更明显的促进作用。     

我国经济发展方式转变的工业结构分析

本文根据全国经济普查数据公报、全国R&D资源清查公报和国民经济统计公报，首先对工业在整个产业结构中的地位和特征进行了具体分析，其次对存在问题的原因进行了分析，认为体制机制是中介原因，更重要的是必须把工业发展存在的重大问题放在我国从农业国向工业国转型，实现工业现代化的大背景下，从发展道路、发展战略、发展方式和具体的发展条件和发展政策下来解释，要看到我国工业化也遵循从量变到结构变化再到质变的发展过程。本文认为，我国工业现代化进程的量变和结构变化已经到达了一个临界状态，进而我国产业结构战略性调整至少要遵循四个原则，同时要加快推进工业转型升级，解决扭曲的产业激励政策，消化和规制过剩产能，完善金融体制机制，降低企业财务成本。     

Foreign ownership and investment: evidence from Korea

This study examines whether an increase in foreign ownership affects investment in Korea. Many studies have shown that in an imperfect financial market, a firm's investment depends on the availability of internal funds. If high foreigners’ shareholding is a sign of a firm's good financial position, and if foreign investors demand better corporate governance to protect their investments, then cash-flow sensitivity of investment decreases with the level of foreign ownership. Using data from Korean firms, it is found that cash-flow sensitivity of investment is lower in firms with high foreign ownership than in those with low foreign ownership. This finding is regarded as evidence for a potential benefit of open financial markets.     

Bank distress and firms’ investment during the Great Recession - evidence from Ireland

This article investigates the impact of bank distress on firms’ performance using unique data during the Great Recession for Ireland. The results show that bank distress, measured as banks’ credit default swap spreads (CDS), has negatively and statistically significantly affected firms’ investment expenditures. Interestingly, firms with access to alternative sources of external finance are not impacted by bank distress. The results are robust to accounting for external finance dependence, demand and trade sensitivities, which affect firm performance and the demand for credit.