The Financing and Growth of Firms in China and India: Evidence from Capital Markets

63 Pages Posted: 20 Apr 2016

See all articles by Tatiana Didier

Tatiana Didier

World Bank

Sergio L. Schmukler

World Bank - Development Research Group (DECRG)

Date Written: April 1, 2013

Abstract

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.

Keywords: Debt Markets, Microfinance, Economic Theory & Research, Access to Finance, Banks & Banking Reform

Suggested Citation

Didier, Tatiana and Schmukler, Sergio, The Financing and Growth of Firms in China and India: Evidence from Capital Markets (April 1, 2013). World Bank Policy Research Working Paper No. 6401. Available at SSRN: https://ssrn.com/abstract=2245935

Tatiana Didier (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States
(202)458-1525 (Phone)

Sergio Schmukler

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN MC 3-301
Washington, DC 20433
United States
202-458-4167 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://www.worldbank.org/en/about/people/s/sergio-schmukler

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