Show Summary Details

Page of

PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com). © Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy and Legal Notice).

date: 25 February 2020

Abstract and Keywords

The importance of both debt and equity funding being allocated efficiently among firms has not gone unnoticed in the academic and practitioner literatures. A disproportionate amount of effort, however, has been devoted to the theory of capital constraints rather than to conducting rigorous empirical work to identify and measure them. Moreover governments around the world, often for questionable motives (typically, vote winning), have had reason to perpetuate the idea of persistent (structural, cycle-independent) debt and equity gaps in their economies. By subsidizing such gaps they hope to garner the votes of the millions of self-employed who are only too happy to receive subsidies to create or perpetuate their failing businesses. It is thus crucial for correct academic analysis and policy formulation to have a critical review of the literature on funding constraints and to highlight the established empirical facts of constraints along with the theories. With this context in mind, this article reviews some of the seminal contributions to the finance gap literature and of their empirical tests.

Keywords: equity funding, equity funding, capital constraints, vote winning, debt and equity gaps, policy formulation

Access to the complete content on Oxford Handbooks Online requires a subscription or purchase. Public users are able to search the site and view the abstracts and keywords for each book and chapter without a subscription.

Please subscribe or login to access full text content.

If you have purchased a print title that contains an access token, please see the token for information about how to register your code.

For questions on access or troubleshooting, please check our FAQs, and if you can''t find the answer there, please contact us.