This paper investigates the effects of financial markets development on the financing choice of firms in developing and developed Asian market economies. The panel data regression models were used for a mean total of 6506 non-financial listed companies during 1995–2016 for 12 Asian economics. The estimated econometric models included short-term, long-term and total debt-equity ratios as dependent variables which were regressed on financial markets development variables (such as banking sector development and stock market development indicators) along with macroeconomic variables (such as inflation, GDP growth, FDI and firm-specific variables (such as ratio of total assets to GDP, ratio of dividends to total assets and ratio of net sales to net fixed assets) as control variables. Also, financing choice of firms in developed and developing stock markets was estimated by splitting the sample into subsamples of developing and developed stock markets. The financial development indicators such as domestic credit to private sector by banks and stock market capitalization exhibited contrasting differences between the selected developing and developed Asian economies. The econometric results indicated that the banking sector and stock market development indicators significantly have opposite effects on the financing choice of the selected firms: banking variable is associated with a rise in the debt-equity ratio whereas stock market variable is associated with a fall in leverage ratio. The econometric effects of stock market development on firms financing choices in developing and developed stock markets showed a remarkable divergence. The evidence indicated that the estimated coefficient of the banking sector indicator in the developed stock market subsample was consistently negative for all the three leverage ratios whereas the coefficient in the developing stock market subsample was positive and significant. The important conclusion of the study is that though banking sector and stock market play different roles are however, complementary to each other suggesting that the policymakers should aim to develop banking sector and stock market simultaneously which will help firms to design their optimal financing choices.
机构:
Accounting Research Institute, Faculty of Accountancy, Universiti Teknologi Mara, Shah Alam, SelangorAccounting Research Institute, Faculty of Accountancy, Universiti Teknologi Mara, Shah Alam, Selangor
机构:
Univ Catolica Portuguesa, Catolica Porto Business Sch, Porto, Portugal
Univ Catolica Portuguesa, CEGE, Porto, PortugalUniv Catolica Portuguesa, Catolica Porto Business Sch, Porto, Portugal
Pinto, Joao M.
Santos, Mario C.
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Univ Catolica Portuguesa, Catolica Lisbon Sch Business & Econ, Lisbon, PortugalUniv Catolica Portuguesa, Catolica Porto Business Sch, Porto, Portugal
Santos, Mario C.
[J].
EUROPEAN JOURNAL OF FINANCE,
2020,
26
(13):
: 1271
-
1300
机构:
Cent Univ Finance & Econ, Belt & Rd Finance Inst, Beijing 100081, Peoples R China
Cent Univ Finance & Econ, Sch Finance, Beijing 100081, Peoples R ChinaSOAS Univ London, Sch Finance & Management, London WC1H 0XG, England
Peng, Yuchao
Shi, Yukun
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机构:
Univ Glasgow, Adam Smith Business Sch, Adam Smith Bldg, Glasgow G12 8QQ, ScotlandSOAS Univ London, Sch Finance & Management, London WC1H 0XG, England
机构:
Indian Inst Management Calcutta, Finance & Control Grp, Kolkata, W Bengal, IndiaIndian Inst Management Calcutta, Finance & Control Grp, Kolkata, W Bengal, India
Jindal, Varun
Seth, Rama
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Indian Inst Management Calcutta, Finance & Control Grp, Kolkata, W Bengal, India
Copenhagen Business Sch, Dept Finance, Copenhagen, DenmarkIndian Inst Management Calcutta, Finance & Control Grp, Kolkata, W Bengal, India
机构:
Indian Inst Technol Kharagpur, Dept Humanities & Social Sci, Kharagpur, W Bengal, IndiaIndian Inst Technol Kharagpur, Dept Humanities & Social Sci, Kharagpur, W Bengal, India
Yadav, Inder Sekhar
Pahi, Debasis
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Indian Inst Technol Kharagpur, Dept Humanities & Social Sci, Kharagpur, W Bengal, IndiaIndian Inst Technol Kharagpur, Dept Humanities & Social Sci, Kharagpur, W Bengal, India
Pahi, Debasis
Goyari, Phanindra
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Univ Hyderabad, Sch Econ, Hyderabad, IndiaIndian Inst Technol Kharagpur, Dept Humanities & Social Sci, Kharagpur, W Bengal, India