Financial and legal institutions and firm size

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Financial and legal institutions and firm size, Volume 1

Author:	Beck, Thorsten; Demirguc-Kunt, Asli; Maksimovic, Vojislav;	Collection Title:	Policy, Research working paper ; no. WPS 2997
Date Stored:	2003/04/11	Document Date:	2003/03/31
Document Type:	Policy Research Working Paper	Language:	English
Report Number:	WPS2997	Sub Sectors:	General finance sector; Banking
SubTopics:	Small Scale Enterprise; International Terrorism & Counterterrorism; Payment Systems & Infrastructure; Economic Theory & Research; Banks & Banking Reform; Microfinance; Decentralization; Private Participation in Infrastructure	Volume No:	1

Summary: The authors investigate how a country's financial institutions and the quality of its legal system explain the size attained by its largest industrial firms in a sample of 44 countries. Firm size is positively related to the size of the banking system and the efficiency of the legal system. Thus, the authors find no evidence that firms are larger in order to internalize the functions of the banking system or to compensate for the general inefficiency of the legal system. But they do find evidence that externally financed firms are smaller in countries that have strong creditor rights and efficient legal systems. This suggests that firms in countries with weak creditor protections are larger in order to internalize the protection of capital investment.


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File Type		Description	File Size (mb)

	PDF 52 pages	Official version*	3.64 (approx.)
	Text	Text version**


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File Type		Description	File Size (mb)

	PDF 46 pages	WPS2997	0.11

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