and van Agtmael ( 1984), Wai and
Patrick ( 1973), Sakong ( 1977) and Ness ( 1974) for a
survey and analysis of stock-market developments in developing countries.
Here and though this chapter, the banking sector refers to both commercial and
special banks, nonbank financial institutions, and foreign banks. The important point here
is that both the cost and the supply of credit from this sector are directly or indirectly
controlled by the monetary authorities.
Even in circumstances where interest rates are free from administrative control,
banks may ration credit as a rational response toward imperfect information and business
risk. See, for instance, Hodgman ( 1960). Freimer and
Gordon ( 1965), and Jaffee and
( 1976) for an analysis of credit rationing along these lines.
For example, von Fustenberg ( 1974) and Summers ( 1981) for empirical applications
of the q theory of investment to the U.S. data and Poterba and
Summers ( 1985) for an
application to the British data.
See Miller ( 1977) for a consideration of taxes, Scott ( 1976) for a consideration of
bankruptcy costs, and Auerbach ( 1985) for an empirical investigation of corporate leverage
in the United States.
See, for instance, Taggart ( 1985) and Holland and
Myers ( 1979).
This figure is based on
Wakasugi et al. ( 1984).
This figure is based on
Taggart ( 1985).
Sundararajan ( 1985) for a theoretical analysis of the macroeconomic effects of
high corporate leverage in developing countries.
P. A. Muet,
P. Palinkas, and
P. Pauly. ( 1985). "Tax Incentives, Monetary Policy,
and Investment in France and Germany." In Stabilization Policy in France and the
Federal Republic of Germany, ed.
G. de Menil and
U. Westphal, 105-180. Amsterdam: North-Holland.
Auerbach. A. J. ( 1985). "Real Determinants of Corporate Leverage." In Corporate Capital
Structures in the United States, ed.
B. M. Friedman, 301-322. Chicago and London: University of Chicago Press.
Baxter N. ( 1967). "Leverage, Risk of Ruin, and the Cost of Capital." Journal of Finance 22: 395-404.
Blejer M. I., and
M. S. Khan. ( 1984). "Government Policy and Private Investment in
Developing Countries." IMF Staff Papers 31: 374-403.
Ciccolo J., and
G. Fromm ( 1979). "'Q' and the Theory of Investment." Journal of Finance 34: 535-547.
-----. ( 1980). "'Q,' Corporate Investment, and Balance Sheet Behavior." Journal of
Money, Credit, and Banking 12: 294-307.
Fédération Internationale des Bourses de Valeurs. Activities and Statistics. Various issues. Paris, France.
Freimer M., and
M. J. Gordon. ( 1965). "Why Bankers Ration Credit." Quarterly Journal
of Economics, no. 79: 397-416.
Hayashi F. ( 1982). "Tobin's Marginal q and Average q: A Neoclassical Interpretation." Econometrica, January, 213-224.
Hite G. L. ( 1977). "Leverage, Output Effects, and the M-M Theorems." Journal of Financial
Economics 13: 177-202.