With the increasing competitive importance of scientific innovations associated with the

new economy it has become critical to understand the dynamics of its’ firm growth during

this early and potentially critical stage of development. This study analyses the relationship

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between firm size and growth for Neuer Markt firms from its inception in 1997 until 2000

Evidence supports the hypothesis that smaller firms on the Neuer Markt grew faster than

larger firms. Further, by using an alternative specification for growth, this study provides

evidence that liquidity constraints impact firm growth, even when controlling for firm size

and age. Results further indicate that while smaller firms grew faster in the new economy,

larger firms grew faster in the old economy, supporting the notion that smaller German

firms may be playing a larger role than previously in bringing new technologies to the

market place.

An Examination of the Relationship Between Firm Size, Growth and Liquidity in the Neuer Markt

Julie Ann Elston

(University of Central Florida)

Discussion paper 15/02

Economic Research Centre

of the Deutsche Bundesbank

June 2002

The discussion papers published in this series represent

the authors’ personal opinions and do not necessarily reflect the views

of the Deutsche Bundesbank.

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