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Financial Frictions, Internal Capital Markets, and the Organization of Production

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  • Pavel Sevcik

    (Universite de Montreal)

Abstract

Diversified business groups and conglomerate firms account for a large fraction of corporate assets and business activity in many emerging and developed countries. This paper examines whether a model in which business groups partially substitute for imperfect credit market is able to quantitatively explain key stylized facts on the way production is organized, on cross-firm productivity differences, and on cross-country differences in the degree of conglomeration.

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  • Pavel Sevcik, 2009. "Financial Frictions, Internal Capital Markets, and the Organization of Production," 2009 Meeting Papers 530, Society for Economic Dynamics.
    • Handle: RePEc:red:sed009:530
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    2. Jungho Lee, 2020. "Estimating the benefits and costs of forming business partnerships," RAND Journal of Economics, RAND Corporation, vol. 51(2), pages 531-562, June.
    3. Mamuta, Mikhail (Мамута, Михаил) & Sorokina, O (Сорокина, О.) & Tyan, V (Тян, В.) & Popova, N (Попова, Н.), 2015. "Building a High Quality Infrastructure of Microfinancing and Credit Cooperation for Effective Development [Построение Качественной Инфраструктуры Рынка Микрофинансирования И Кредитной Кооперации Дл," Published Papers mn25, Russian Presidential Academy of National Economy and Public Administration.
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    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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