Determinants of access to external finance: Evidence from selected publicly listed companies in the industrial sector in the Philippines for the period 1997-2006

By gaining access to external finance, firms can realize their full growth potential. To date, the growing literature on the subject has been a source of vital information. However, most of these research studies involve first world countries and to the best of the researchers\u27 knowledge, there are hardly any that solely focused on the Philippines. In this light, the researchers examine the macroeconomic and microeconomic factors that influence access to external finance. The researchers use dynamic panel data estimation techniques to estimate the models over a sample of firms in the industrial sector in the Philippines during the period from 1997 to 2006. The researchers find that the firms in the industrial sector in the Philippines are quite equally reliant on short-term debt financing and long-term debt financing. In fact, approximately 52% represents short-term debts - 34% of which belongs to short-term non-banks debts. In the case of short-term bank debts, the researchers find that this type of financing is sensitive to firm age, firm size, and its 1-year lagged value. Alternatively in the case of short-term non-bank financing, the results indicate that this type of financing is sensitive to firm-specific characteristics, except for firm profitability. In contrast, the researchers find that bank debts are generally affected by firm liquidity, profitability, and size