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The financing and growth of firms in China and India : evidence from capital markets, Volume 1
 
Author:Didier, Tatiana; Schmukler, Sergio L.; Country:China; India;
Date Stored:2013/04/08Document Date:2013/04/01
Document Type:Policy Research Working PaperSubTopics:Access to Finance; Economic Theory & Research; Debt Markets; Banks & Banking Reform; Microfinance
Language:EnglishMajor Sector:Finance
Rel. Proj ID:1W-Capital Flows And Financial Integration -- -- P053639;Region:East Asia and Pacific; South Asia
Report Number:WPS6401Sub Sectors:General finance sector
Collection Title:Policy Research working paper ; no. WPS 6401Paper is funded by the Knowledge for Change Program (KCP)TF No/Name:TF092859-KCP - CAPITAL RAISING ACTIVITY IN DOMESTIC AND INTERNATIONAL MARKETS; TF098583-KCP II - On the use of domestic and international debt markets; BBRSB-BB RESEARCH SUPPORT BUDGET; TF040198-WORLD:; TF094565-KCP II - GLOBALIZATION, RISK, AND CRISES; TF010688-KCP II - Understanding Capital Flows to Developing Countries; TF040145-WORLD:; TF092864-CAUSES AND CONSEQUENCES OF MACROECONOMIC VOLATILITY
Volume No:1  

Summary: This paper studies the extent to which firms in China and India use capital markets to obtain financing and grow. Using a unique data set on domestic and international capital raising activity and firm performance, it finds that the expansion of financial market activity since the 1990s has been more limited than what the aggregate figures suggest. Relatively few firms raise capital. Even fewer firms capture the bulk of the financing. Moreover, firms that issue equity or bonds are different and behave differently from other publicly listed firms. Among other things, they are typically larger and grow faster. The differences between users and non-users exist before the capital raising activity, are associated with the probability of raising capital, and become more accentuated afterward. The distribution of issuing firms shifts more over time than the distribution of those that do not issue, suggesting little convergence in firm size among listed firms.

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