Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7362326 | Journal of Financial Intermediation | 2016 | 36 Pages |
Abstract
Different modes of external finance provide heterogeneous benefits for the borrowing firms. Informal finance offers informational advantages whereas formal finance is scalable. Using unique survey data from China, we find that informal finance is associated with higher sales growth for small firms but lower sales growth for large firms. We identify a complementary effect between informal and formal finance for the sales growth of small firms, but not for large firms. Co-funding, thereby simultaneously using the informational advantage of informal finance and the scalability of formal finance, is therefore the optimal choice for small firms.
Keywords
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Strategy and Management
Authors
Hans Degryse, Liping Lu, Steven Ongena,