Banking reform and the financing of firm investment: An empirical analysis of the Chilean experience, 1983-92

This article investigates whether the Chilean banking reforms of the 1980s have contributed to reducing market imperfections in Chilean financial markets in the late 1980 and early 1990s. To analyse this issue, patterns of investment and its finance for different types of firms are studied, based on balance sheet information of a panel of 70 firms. The most important conclusion is that those specific reforms, aimed at reducing intra-conglomerate lending, seem to have been successful, since access of non-conglomerate firms has increased, indicating a reduction of existing market imperfections for such firms.