Using data drawn from the universe of firms to avoid sample censoring problems, this paper finds financial constraints to be binding on mid-sized firms and those in construction and services sectors only. Growth of the majority of firms is unaffected by financial burdens. Firm size distribution...

Which of the strategies for financing constraints in economic models is the most empirically plausible? This paper tests two commonly used models of financing constraints, costly state verification (Townsend, 1979) and moral hazard (Holmström and Tirole, 1997), using a comprehensive data set of...

Many policy makers are concerned that tight financing constraints for small businesses are stalling the recovery from the Great Recession. This paper empirically assesses two agency problems commonly used to motivate financing constraints - one resulting in a "firm balance sheet channel" and one...