Integration of Financially Intermediated Services for Firm Growth A Micro Level Analysis form Pakistan

Abstract

Financial intermediation services offered by financial institutions facilitate the firms in smoothening their operations. This study considers the role of the intermediaries beyond the traditional savings and pooling of funds. It takes into account multiple intermediary services offered by financial institutions. These are inclusive of transaction cost reduction services, assurance of liquidity services, information sharing function, and facilitation for delegated monitoring. Firms benefit from these services. This study testifies the impact of financially intermediated functions on firm growth. The sample of the study includes 130 listed companies in the PSX. The analysis employs the Panel Data Analysis (PDA) technique. The results of Transaction Cost Reduction Services, Liquidity Assurance Services, and Information Sharing Services are found to have a statistically significant impact while the proxy for Delegated Monitoring Services offered by intermediaries is found to have an insignificant impact on firm growth. The significance of the integrated intermediation services reflects that firms utilizing the offered intermediary services are benefitted and firm growth is observed as a Fixed Effect.