Measuring financial exclusion of firms

Gerhard Kling*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)
6 Downloads (Pure)


Financial ratios such as leverage or indices based on firm characteristics (KaplanZingales, Whited-Wu, Hadlock-Pierce) have been used to measure whether a firm has too much debt. Let’s assume a firm does not have any debt. Does this ‘choice’ reflect financial strength or exclusion? To measure the latter, this paper develops a theory to estimate the value of financial constraints. Based on a strictly concave production function, firms that face financial constraints take longer to reach their steady-state. This added time diminishes firm value, which translates into a shadow price of relaxing financial constraints.
Original languageEnglish
Article number101568
Number of pages5
JournalFinance Research Letters
Early online date19 May 2020
Publication statusPublished - Mar 2021

Bibliographical note

Supplementary material associated with this article can be found, in the online version, at 10.1016/
Supplementary Data S1. Supplementary Raw Research Data. This is open data under the CC BY license


  • impulse control
  • financial contraints
  • financial exclusion
  • Financial constraints
  • Impulse control
  • Financial exclusion


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