Financial markets, financial dependence, and the allocation of capital

Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review

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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)810-818
Journal / PublicationJournal of Banking and Finance
Volume33
Issue number5
Publication statusPublished - May 2009
Externally publishedYes

Link(s)

DOI

DOI
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Link to Scopus https://www.scopus.com/record/display.uri?eid=2-s2.0-60749096538&origin=recordpage
Permanent Link https://scholars.cityu.edu.hk/en/publications/publication(5cfef736-301c-441b-91b4-737e28646f72).html

Abstract

We explore one specific channel through which finance promotes growth: the allocation of capital. Using international industrial data, we find that countries with developed financial markets invest more in growing industries, and pull out more funds of declining ones. Most interestingly, this pattern is more eminent for those industries more dependent on external financing. Various robustness checks show that the results are not driven by reverse causality, omitted variables, specific countries or industries. © 2008 Elsevier B.V. All rights reserved.

Research Area(s)

  • Capital allocation, Financial dependence, Financial development, Investment

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Publication fingerprints text

100
Industry Business & Economics
66
Financial markets Business & Economics
33
Causality Business & Economics
33
Finance Business & Economics
33
Robustness Business & Economics
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Citation Format(s)

[ RIS ] [ BibTeX ]

Financial markets, financial dependence, and the allocation of capital. / Pang, Jiaren; Wu, Haibin.

In: Journal of Banking and Finance, Vol. 33, No. 5, 05.2009, p. 810-818.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review