Cultural Preferences and the Choice between Formal and Informal Financing
Series
School of Finance Working Paper Series
Type
working paper
Date Issued
2017-05
Author(s)
Abstract (De)
This paper documents significant differences in the financing structure of small firms with managers of diverse cultural backgrounds. To separate the effect of culture from other factors that affect the financing structure of firms, we exploit cultural heterogeneity within a geographical area with shared regulations, institutions, and macroeconomic cycles. Our findings suggest that there exist significant differences in the culturally embedded preferences towards the use of formal and informal sources of financing (bank loans and trade credit). Our results are robust to alternative explanations based on potential differences in credit constraints and in the distribution of cultural origins across industrial sectors, trading partners, and headquarters location.
Language
English
Keywords
Managerial cultural origin
Informal financing
Trade credit
Small firm financing
HSG Classification
contribution to scientific community
HSG Profile Area
None
Publisher
SoF - HSG
Publisher place
St. Gallen
Volume
2017/07
Number
07
Pages
43
Subject(s)
Division(s)
Eprints ID
250985
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Name
Q__SOF_WP_Papers_17_07_Garcia et al_Cultural Preferences.pdf
Size
797.01 KB
Format
Adobe PDF
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