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Understanding informal financing

PLEASE NOTE: THE VENUE FOR THIS EVENT HAS CHANGED.
Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 19 November 2019
2.00pm–3.30pm

Venue

Seminar Room 7, #132 Crawford Building, Lennox Crossing, The ANU

Speaker

Meijun Qian, College of Business and Economics, The ANU

Contacts

Ross McLeod, Seminar Convener, ACDE

This paper offers a framework to understand informal financing based on mechanisms to deal with asymmetric information and enforcement. It finds that constructive informal financing such as trade credits and family borrowing that relies on information advantages or an altruistic relationship is associated with good firm performance. Underground financing such as money lenders who use violence for enforcement is not. Constructive informal financing is prevalent in regions where access to bank loans is extensive, while its role in supporting firm growth decreases with bank loan availability. International comparisons show that China is not an outlier but rather average in using informal financing.

Meijun Qian is a Professor of Finance at the Research School of Finance, Actuarial Studies, and Statistics, College of Business and Economics, The ANU

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