Does access to external finance improve productivity? Evidence from a natural experiment
We study the relation between access to finance and productivity. Our contribution to the literature is a clean identification of a causal effect of access to finance on productivity. Specifically, we exploit an exogenous shift in demand for a product to expose how producers adapt their productivity in the presence of varying levels of access to finance. We use a triple differences testing approach and find that production increases the most over the sample period in areas with relatively strong access to finance, even in comparison with a control group. This result is statistically significant and robust to a variety of controls, alternative variables, and tests. The causal effect of access to finance on productivity that we find speaks to the larger role of finance in economic growth.
Year of publication: |
2011
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Authors: | Butler, Alexander W. ; Cornaggia, Jess |
Published in: |
Journal of Financial Economics. - Elsevier, ISSN 0304-405X. - Vol. 99.2011, 1, p. 184-203
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Publisher: |
Elsevier |
Subject: | Access to finance Economic growth |
Saved in:
Online Resource
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