Debt financing decreases with internal cash flow, impacting firm growth.
The study looked at how companies in China use their own money versus borrowing to fund their operations. They found that when companies have a lot of their own money, they tend to borrow less. Also, when companies have a hard time getting loans, they rely more on their own funds. So, the more money a company has, the less it borrows, and the tougher it is to get a loan, the more it uses its own money.