The value of business networks in emerging economies: An analysis of firms' external financing opportunities

Arbeitspapier

The paper argues that networked firms are likely to have an advantage in securing external finance in countries with weak legal and judicial institutions since it helps financial institutions to minimize the underlying agency costs of lending. An analysis of recent BEEPS data from fifteen Central and Eastern European (CEE) countries lends some support to this hypothesis. Even after controlling for other factors, firms affiliated to business associations are more likely to secure bank finance. Importance of being associated with business networks is particularly evident among firms who borrow from private domestic and foreign banks, as these new banks attempt to minimize costs of adverse selection. Networking however discriminates against the small and medium sized firms' access to bank loans in the CEE regions. Results are robust in both single cross-section and panel data analyses.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IZA Discussion Papers ; No. 5738

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Corporate Finance and Governance: General ; Transactional Relationships; Contracts and Reputation; Networks ; Business Economics: General ; Socialist Systems and Transitional Economies: Planning, Coordination, and Reform
• Thema: business networks ; agency costs ; external firm financing ; bank loans ; transition economies ; endogeneity

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Owolabi, Oluwarotimi ; Pal, Sarmistha
• Ereignis: Veröffentlichung
• (wer): Institute for the Study of Labor (IZA)
• (wo): Bonn
• (wann): 2011

Weitere Informationen

• Handle: http://hdl.handle.net/10419/52016
• URN: urn:nbn:de:101:1-201106013883
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ