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Financial Liberalization and the Industrial Response: Concentration and Entry in Malawi

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  • Kabango, Grant P.
  • Paloni, Alberto
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    Abstract

    It has been suggested that financial liberalization may be a key policy to promote industrialization as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalization on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalization has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful.

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    Bibliographic Info

    Article provided by Elsevier in its journal World Development.

    Volume (Year): 39 (2011)
    Issue (Month): 10 ()
    Pages: 1771-1783

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    Handle: RePEc:eee:wdevel:v:39:y:2011:i:10:p:1771-1783

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    Web page: http://www.elsevier.com/locate/worlddev

    Related research

    Keywords: financial liberalization; industrial concentration; firm entry; external finance dependence; Africa; Malawi;

    References

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    Cited by:
    1. Conor O'Toole & Carol Newman, 2012. "Investment Financing and Financial Development: Firm Level Evidence from Vietnam," The Institute for International Integration Studies Discussion Paper Series iiisdp409, IIIS.

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