Liquidity Constraints, Competition, and Markup Cyclicality

Matías Braun, Claudio Raddatz

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


This article provides evidence on the relation among financial constraints, competition, and the cyclicality of markups. Based on a long series of industry data from a large number of countries, we find that markups increase in conjunction with the business cycle in environments with higher short-term financial constraints (liquidity constraints) and more competition. The evidence also suggests that these two elements complement each other: the procyclicality of markups in firms facing both high competition and high liquidity constraints is higher than that explained by each determinant independently.

Original languageEnglish
Pages (from-to)769-802
Number of pages34
JournalFinancial Management
Issue number3
StatePublished - 1 Sep 2016
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2016 Financial Management Association International


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