finance

bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed I POLICY RESEARCH WORKING PAPER 2905 Using a firm-level survey database covering 48 countries, determinant of whether firms can have access to different Beck, Demirgiuc-Kunt, and Maksimovic investigate types of external finance. Larger firms with financing whether differences in financial and legal development needs are more likely to use external finance compared affect the way firms finance their investments. The with small firms. The results also indicate that these firms results indicate that external financing of investments is are more likely to use external finance in more not a function of institutions, although the form of developed financial systems, particularly debt and equity external finance is. The authors identify two finance. The authors also find evidence consistent with explanations for this. First, legal and financial the pecking order theory in financially developed institutions affect different types of external finance in countries, particularly for large firms. offsetting ways. Second, firm size is an importan