This thesis includes three chapters that focus on international macroeconomics and development economics. These essays study the channels through which firms overcome financing constraints to achieve growth. Access to credit is critical for the survival and expansion of both large and small firms. However, credit is a limited resource, leading firms to seek various sources of external financing. The three chapters of this thesis explore different channels: (1) bank financing via short-term loans; (2) offshore borrowing through bond issuance in tax havens; and (3) trade credit, where firms extend credit to one another.
The first chapter examines short-term loan financing for small and medium-sized enterprises (SMEs) through the lens of a credit guarantee program in Morocco. My co-authors and I cali- brate and estimate a quantitative model to evaluate the equilibrium growth and welfare gains of this loan guarantee program. We find that short-term finance promotes firm growth by en- abling entrepreneurs to allocate their net worth more efficiently away from unproductive cash and towards productive capital. We also discover that these effects are persistent only if firms face intertemporal distortions in the form of exit risk or a tax on net worth. We empirically vali- date these findings by using data from the loan guarantee program designed to relax short-term external financial constraints in Morocco. The empirical results indicate that guaranteed firms expand their production scale and decrease their cash-to-asset ratio.
The second chapter investigates how large firms in China, particularly private companies in the real estate sector, circumvent domestic credit constraints by incorporating in tax havens. I analyze the spillover effects of a macroprudential policy aimed at tightening the domestic cor- porate bond market. By compiling data from various databases, I piece together the puzzle of Chinese offshore corporate behaviors in tax havens. My empirical estimation indicates that the
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macroprudential policy successfully reduces the bond issuances of non-state-owned enterprises (non-SOEs) from the domestic credit market. Further analysis reveals that this group of firms is more likely to issue bonds through shell companies in tax havens, compared to their state-owned counterparts after the new regulation. The effects are primarily driven by private firms in the real estate sector. Specifically, a 1% increase in private ownership corresponds to a 1% increase in bonds issued in tax havens for non-SOEs in the real estate industry after the regulatory changes.
The third chapter explores the role of trade credit, examining the impact of a new law aimed at improving payment delays for firms engaged in government procurement contracts in Mo- rocco. Delayed payment among firms is a widespread phenomenon in the Moroccan business world. Payments usually take between 120 and 150 days, compared to an average of 70 days in France. It adversely affects the cash-flow dynamics of enterprises, especially SMEs. My co- authors and I study the impact of Act 49-15, a regulation designed to limit payment delays in government procurement contracts. Using a confidential database from the General Treasury under the Moroccan Ministry of Economy and Finance, we find that firms exposed to the reform reduce their trade credit post-reform relative to unexposed firms. Our analysis further indicates that the treatment effects on trade credit are mostly driven by large firms. This shows an unequal exposure to the new law across firm sizes. The findings highlight the size-dependent effects of policy interventions.