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The Impact of the Business Environment on Young Firm Financing

This paper uses a dataset of more than 70,000 firms in over 100 countries to systematically study the use of different financing sources for new and young firms, in comparison to mature firms. The authors find that in all countries younger firms re...

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Bibliographic Details
Main Authors: Chavis, Larry W., Klapper, Leora F., Love, Inessa
Language:English
Published: 2012
Subjects:
ACCESS TO BANK
ACCESS TO CREDIT
ACCESS TO EXTERNAL FINANCE
ACCESS TO FINANCE
ACCESS TO FINANCING
ACCESS TO FORMAL FINANCE
ADVERSE SELECTION
ASYMMETRIC INFORMATION
AVAILABILITY OF BANK FINANCING
AVAILABILITY OF CREDIT
BANK CREDIT
BANK FINANCING
BANK POLICY
BANKS
BARRIERS TO GROWTH
BORROWER
BORROWING
BRIBES
CAPITAL STRUCTURE
CHECKS
COLLATERAL
COMMERCIAL BORROWING
CONTRACT ENFORCEMENT
CORPORATE FINANCE
CORPORATE FINANCING
CORPORATE GOVERNANCE
CORRUPTION
CREDIT BUREAU
CREDIT CARDS
CREDIT CONTRACT
CREDIT CONTRACTS
CREDIT HISTORY
CREDIT INFORMATION
CREDIT SCORING
CREDITOR
CREDITOR RIGHTS
CREDITORS
CREDITWORTHINESS
DEBT
DEBT CAPACITY
DEBT RECOVERY
DEPENDENT
DEVELOPING COUNTRIES
DOMESTIC BANK
EARNINGS
ECONOMIC DEVELOPMENT
ECONOMIC GROWTH
ECONOMICS
EMPLOYMENT
ENTERPRISE PERFORMANCE
ENTREPRENEUR
ENTREPRENEURIAL FINANCE
ENTREPRENEURS
ENTREPRENEURSHIP
EQUITY CAPITAL
EQUITY FINANCE
EQUITY RATIO
EXCLUSION
EXPORTER
EXPORTERS
EXTERNAL FINANCING
FINANCIAL CONSTRAINTS
FINANCIAL CONTRACTS
FINANCIAL COSTS
FINANCIAL DEVELOPMENT
FINANCIAL MARKETS
FINANCIAL PRODUCTS
FINANCIAL STATEMENTS
FINANCIAL STUDIES
FINANCIAL SYSTEMS
FINANCING CONSTRAINTS
FINANCING NEEDS
FINANCING SOURCES
FIRM FINANCING
FIRM PERFORMANCE
FOREIGN BANK
FOREIGN BANKS
FOREIGN OWNERSHIP
FORMAL BANK
FORMAL CREDIT
GREATER ACCESS
GROWTH OPPORTUNITIES
INCOME GROUP
INCOME GROUPS
INCOME LEVEL
INFORMAL CREDIT
INFORMAL FINANCE
INFORMAL FINANCING
INFORMAL LENDERS
INFORMATION ASYMMETRY
INFORMATION INFRASTRUCTURE
INFORMATION INFRASTRUCTURES
INSTITUTIONAL ENVIRONMENT
INTEREST RATE
INTEREST RATES
INTERNAL FINANCING
INTERNAL FUNDS
INTERNATIONAL BANK
INVESTMENT FINANCING
INVESTMENT OPPORTUNITIES
LEGAL CONSTRAINTS
LEGAL ENVIRONMENT
LEGAL ENVIRONMENTS
LEGAL SYSTEM
LENDERS
LENDING BEHAVIOR
LIABILITY
LINE OF CREDIT
LIQUIDITY
LIQUIDITY CONSTRAINTS
LOAN
LOAN CHARACTERISTICS
LOAN SIZE
LOCAL BANKS
MATURITY
MORAL HAZARD
NEW BUSINESS
OVERDRAFT
OVERDRAFT FACILITY
PERSONAL CREDIT
POLITICAL ECONOMY
PRIVATE CREDIT
PRIVATE CREDIT BUREAU
PRIVATIZATION
PROFITABILITY
PROPRIETORSHIP
REGIONAL DUMMIES
REPAYMENT
RETAINED EARNINGS
RETURN
RISK MANAGEMENT
RULE OF LAW
SHAREHOLDER
SMALL BUSINESSES
SOURCES OF FINANCE
START-UP
TRADE CREDIT
TRANSITION COUNTRIES
UNLIMITED LIABILITY
USE OF COLLATERAL
VALUE OF COLLATERAL
WORKING CAPITAL
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100527085728
http://hdl.handle.net/10986/3808
Description
Summary:This paper uses a dataset of more than 70,000 firms in over 100 countries to systematically study the use of different financing sources for new and young firms, in comparison to mature firms. The authors find that in all countries younger firms rely less on bank financing and more on informal financing. However, they also find that younger firms use more bank finance in countries with stronger rule of law and better credit information, and that the reliance of young firms on informal finance decreases with the availability of credit information. Overall, the results suggest that improvements to the legal environment and availability of credit information are disproportionately beneficial for promoting access to formal finance by young firms.

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