In this paper we explore the relationship between the individual decision to become an entrepreneur and the institutional context. We pinpoint the critical roles of property rights and the size of the state sector for entrepreneurial activity and test the relationships empirically by combining...

This paper is an analysis of Japan’s credit channel. The economic condition has no hindrance, but credit demand showed an inert performance. The state’s policies have helped the flow of finance and prevent bankruptcy, but several other aspects act as an impediment to credit...

We examine the impact of product market competition on quantity-of-capital constraints in 58 countries. Prior work shows that competition increases the costs of debt and equity, which reduce the economic profit from investment. Capital constraints, however, may prevent firms from exploiting all...

This survey reviews the literature on the political economy of financial structure, broadly defined to include the size of capital markets and banking systems as well as the distribution of access to external finance across firms.The theoretical literature on the institutional basis for...

This survey reviews how a recent political economy literature helps explaining variation in governance, competition, funding composition and access to credit. Evolution in political institutions can account for financial evolution, and appear critical to explain rapid changes in financial...

In our study we investigate the association between inter-organizational trust and access to financing for 11,500 firms across transitional countries (including Turkey). The results of our study contribute to the stream of economic development literature in two primary ways. First, we show that...

By employing a rich sample of firm-level data in seven Eastern Europe and Central Asian countries from Europe and Central Asia, our paper investigates core as well as some specific determinants of firm innovation. We find that the likelihood of engaging in innovation for a firm increases with...

This paper uses survey data for 60,000 households from 29 transition economies in 2006 and 2010 to explore how the use of banking services is related to household characteristics, as well as to bank ownership, deposit insurance and creditor protection. At the household level we find that the...

Through their contribution to the creation of added value and new jobs, the small and medium enterprises (SMEs) have a significant role in the economic and social development of a country. However, these enterprises are facing numerous obstacles that limit their performance, growth and...

How does finance affect employment and inter-industry job reallocation? We present a model that predicts that financial development (i) increases employment and/or labor productivity and wages, with a smaller impact at high levels of the equilibrium wage and financial development; (ii) may...