On the Evolution of Firm Size Distributions
Posted: 15 May 2008
We study the impact of financial constraints on firm size distribution (FSD). We find that financially constrained firms, identified using various proxies, are smaller than the others (their FSD is more skewed to the right). However, among OECD countries, the FSD of nonconstrained firms virtually overlaps that of the entire sample, suggesting that the overall impact of financial constraints on the FSD is modest. The difference is more pronounced in our sample of firms from non-OECD countries. We conclude that financial constraints cannot be considered the main determinant of the FSD evolution in developed economies.
Keywords: Size Distribution of Firms, credit rationing
JEL Classification: L11, L25
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