Financial constraints and firm size: Micro-evidence and aggregate implications

Arbeitspapier

Using a unique dataset covering the universe of Portuguese firms and their credit situation we show that financially constrained firms are found across the entire firm size distribution, even in the top 1%. Incorporating a richer, empirically supported, productivity process into a standard heterogeneous firms model generates a joint distribution of size and credit constraints in line with the data. The presence of large constrained firms in the economy, together with their elevated capital share, explains about 66% of the response of output to a financial shock. We conclude by providing micro-evidence in support of the model mechanism.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 948

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; Investment; Capital; Intangible Capital; Capacity ; Macroeconomics: Production
• Subject: Firm size ; business cycle ; financial accelerator

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ferreira, Miguel H. ; Haber, Timo ; Rörig, Christian
• Event: Veröffentlichung
• (who): Queen Mary University of London, School of Economics and Finance
• (where): London
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/284298
• Last update: 10.03.2025, 11:42 AM CET