Financing asset growth: Cross-country evidence from Asia

This study analyzes the sources of financing for asset growth in firms and the factors affecting capital structure. The study uses firm-level panel data from 2015 to 2024, which covers companies from developed, emerging, and frontier markets. Empirical evidence suggests that firms tend to rely on equity to finance asset growth. The estimated coefficient of equity growth is higher than the coefficient of debt growth. Analysis by industry, size, and country indicates a significant difference in the financing growth between firms. It reflects the role of institutional context, level of financial development, and structural characteristics of each group of firms. Moreover, the results of the capital structure model indicate that asset size has a significant impact on the financing strategy. Finally, asset growth and firm size are the main drivers of debt issuance probability. The findings confirm that equity and liabilities act as flexible financial tools enabling firms to finance asset growth.