Alternative financing and private firm performance
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AbstractWhy do private firms grow vibrantly in transition economies despite their limited access to formal financing? This study underscores the importance of informal financing in facilitating the growth of private firms in China. Drawing from the institutional economics argument, we posit that informal financing, in the form of underground financing and trade credit, substitutes formal financing in providing financial assistance and capital to private firms in China. We further posit that the effects of two kinds of informal financing vary across provinces with different levels of institutional development, and complement each other by supporting firms in different industries. We test our arguments with a sample of 284 private firms in 19 cities in China. The results generally support the value-added effects of alternative financing and its coexistence with formal financing. Our study contributes to the literature by highlighting informal financing as a void-filling institution in the capital markets in China.
All Author(s) ListYiu DW, Su J, Xu YH
Journal nameAsia Pacific Journal of Management
Year2013
Month9
Day1
Volume Number30
Issue Number3
PublisherSPRINGER
Pages829 - 852
ISSN0217-4561
eISSN1572-9958
LanguagesEnglish-United Kingdom
KeywordsAlternative financing; Capital access; China; Private firms
Web of Science Subject CategoriesBusiness & Economics; Management; MANAGEMENT

Last updated on 2020-26-05 at 01:10