Handbook of the Economics of Finance SET:Volumes 2A & 2B

Chapter 10

Financing in Developing Countries

Meghana Ayyagari^a, Asli Demirguc-Kunt^b and Vojislav Maksimovic^c

^aSchool of Business, George Washington University, Funger Hall 401, Washington D.C. 20052, USA

^bThe World Bank, 1818 H Street NW, Washington D.C. 20433, USA

^cRobert H. Smith School of Business, Van Munching Hall, University of Maryland, College Park, MD 20742, USA, [e-mail]

Abstract

This chapter reviews and synthesizes theoretical and empirical research on the role of finance in developing countries. First, the paper presents the stylized facts about firms in developing nations as well as the legal, financial, and broader institutional framework in which these firms operate. Next, the paper focuses on the financing choices available ...