The Sources of Financing Constraints

AuthorB. Nikolov, L. Schmid, R. Steri
JournalJournal of Financial Economic
Date15 fév. 2021
CatégorieAcademic Publications
Volume139(2)
Page numbers478–501

Which financial frictions drive firms’ financing constraints? We structurally estimate dynamic firm financing models embedding many financial frictions, on panels of public firms and private firms. We focus on limited enforcement, moral hazard, and trade-off models and assess which models rationalize best observed corporate policies across various samples. Our tests, based on empirical policy function benchmarks, favor trade-off models for larger public firms, limited commitment models for smaller public firms, and moral hazard models for Private firms. Our estimates suggest significant financing constraints due to agency frictions and highlight the importance of identifying their sources for firm valuation.