Firms are the engines of growth in any economy. It is therefore important to study how they finance themselves, as this may have a direct impact on the overall growth rate of the economy. A firm can choose whether to finance its activities with equity, debt, or both. An optimal capital structure is that mix of internal and external finance (debt and/or equity) that optimizes the value of a firm. Therefore, the question of how to finance or equivalently from where to borrow becomes a crucial decision. In each chapter of this study, we study the financing decisions of a different set of firms faced with financial constraints. The two countries we focus on are the UK and China. Our study examines two types of firms in the UK. We first study listed firms and examine how financial constraints affect their leverage decisions. Next, we focus on the financing decisions of small and medium-sized enterprises (SMEs), as these firms are more likely to suffer from financial constraints. To examine financial constraints, we use both conventionally used indicators of financial constraints and new indicators. Our study on China is mainly based on listed manufacturing Chinese firms. China is currently the largest developing and transition economy in the world. It is interesting to study the financing behaviour of manufacturing firms in China as manufacturing is believed to be the main engine behind the Chinese growth miracle. We account for factors specific to the Chinese case to determine if the leverage decisions of Chinese firms are similar to those of firms in other parts of the world. We also examine the cash holding decisions of Chinese firms as these firms seem to be highly financially conservative. Our results indicate that firms tend to follow a financial hierarchy in their financing patters and that the preferred source of external finance of most firms, whether in the UK or China, remains leverage. However firms tend to reduce their leverage when they experience an increase in their internal funds, which points towards a financially conservative behaviour. This needs to be accounted for in policy decisions that are mainly formulated on the supply side.