This paper utilises data on all the listed companies in Barbados spanning the period 1990 to 2000 to examine the hypothesis that a firm’s financing preferences has no influence on growth. Contrary to the previous literature, a model of firm growth is augmented with financing preference variables and estimated using instrumental variable panel data techniques. The results from this study suggest that the use of internal and external funds is inversely related to firm growth, while equity finance has a positive impact. Moreover, the strength of these relationships is enhanced for younger, smaller enterprises.
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