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Does access to credit improve productivity? Evidence from Bulgarian firms

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  • Gatti, Roberta
  • Love, Inessa

Abstract

Although it is widely accepted that financial development is associated with higher growth, the evidence on the channels through which credit affects growth at the microeconomic level is scant. Using data from a cross section of Bulgarian firms, we estimate the impact of access to credit, as proxied by indicators of whether firms have access to a credit line or overdraft facility on productivity. To overcome potential omitted variable bias of OLS estimates, we use information on firms’ past growth to instrument for access to credit. We find credit to be positively and strongly associated with TFP. These results are robust to a wide range of robustness checks.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6676.

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Date of creation: Feb 2008
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Handle: RePEc:cpr:ceprdp:6676

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Keywords: access to credit; productivity; transition;

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References

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Citations

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Cited by:
  1. Levine, Oliver & Warusawitharana, Missaka, 2014. "Finance and Productivity Growth: Firm-level Evidence," Finance and Economics Discussion Series 2014-17, Board of Governors of the Federal Reserve System (U.S.).
  2. Chen, Minjia & Guariglia, Alessandra, 2013. "Internal financial constraints and firm productivity in China: Do liquidity and export behavior make a difference?," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1123-1140.
  3. Gatti, Roberta & Honorati, Maddalena, 2007. "Informality among Formal Firms: Firm-level, Cross-country Evidence on Tax Compliance and Access to Credit," CEPR Discussion Papers 6597, C.E.P.R. Discussion Papers.
  4. Itzhak Goldberg & Lee Branstetter & John Gabriel Goddard & Smita Kuriakose, 2008. "Globalization and Ttechnology Absorption in Europe and Central Asia : The Role of Trade, FDI, and Cross-Border Knowledge Flows," World Bank Publications, The World Bank, number 6445, July.
  5. Paulo G. Correa & Ana M. Fernandes & Chris J. Uregian, 2010. "Technology Adoption and the Investment Climate: Firm-Level Evidence for Eastern Europe and Central Asia," World Bank Economic Review, World Bank Group, vol. 24(1), pages 121-147, January.
  6. World Bank, 2008. "Bulgaria - Investment Climate Assessment : Volume 3. Technical Appendices," World Bank Other Operational Studies 7867, The World Bank.
  7. Castillo, Leopoldo Laborda & Guasch, Jose Luis, 2012. "Overdraft facility policy and firm performance : an empirical analysis in eastern European Union industrial firms," Policy Research Working Paper Series 6101, The World Bank.
  8. Marialuz Moreno Badia & Veerle Slootmaekers, 2008. "The Missing Link Between Financial Constraints and Productivity," LICOS Discussion Papers 20808, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  9. Sánchez-Valadez, Manuel, 2012. "Decisiones financieras, competencia en el mercado y desempeño de las empresas: Evidencia empírica para Iberoamérica/Financial Decisions, Market Competition and Firm Performance: Empirical Evidence ," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 30, pages 359 (36 pag, Abril.
  10. Minjia Chen & Alessandra Guariglia, . "Financial constraints and firm productivity in China: do liquidity and export behavior make a difference?," Discussion Papers 11/09, University of Nottingham, GEP.

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