Financially underdeveloped countries see small firms grow faster with lower debt ratios.
The article explores how different financial systems affect how companies grow and borrow money. In countries with less developed financial markets, small companies tend to grow faster and have less debt compared to larger companies. The researchers created a model that shows how financial obstacles can impact a company's growth and borrowing decisions. By looking at real-world data, they found that financial restrictions can explain why small and large companies grow at different rates in different countries.