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Financial Development, Labor and Market Regulations and Growth

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Author Info
Raquel FONSECA (CSEF, University of Salerno)
Natalia UTRERO- GONZALEZ (University Autonoma de Barcelona)

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Abstract

This paper investigates the importance that market regulation and financial imperfections have on …rm growth. We analyse institutions affecting labor market as Employment Protection Laws (EP) and Product Market Regulation (PM). We show that together with the beneficial effects of …nancial development, a firm will get less financing, and thus invest less, in a weak financial market (finance effect), the strictness of product and labor market regulations also affect firm growth (labor effect). In particular, we show that the stricter the rules the more detrimental the influence on growth in sectoral value added for a large number of countries. We also show that the labor effect overcomes the positive finance effect.

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File URL: http://129.3.20.41/eps/fin/papers/0509/0509016.pdf
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Publisher Info
Paper provided by EconWPA in its series Finance with number 0509016.

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Length: 30 pages
Date of creation: 12 Sep 2005
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Handle: RePEc:wpa:wuwpfi:0509016

Note: Type of Document - pdf; pages: 30
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Web page: http://129.3.20.41

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Related research
Keywords: Financial development; labor and product market institutions; growth.;

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Find related papers by JEL classification:
G2 - Financial Economics - - Financial Institutions and Services
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Private Pensions
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Guglielmo Barone & Federico Cingano, 2008. "Service regulation and growth: evidence from OECD countries," Temi di discussione (Economic working papers) 675, Bank of Italy, Economic Research Department. [Downloadable!]
  2. Andrea Bikfalvi & Christian Serarols & David Urbano & Yancy Vaillant, 2007. "Technological Trampolines for new venture creation in Catalonia: the case of University of Girona," Working Papers 200701, Department of Business Economics, Universitat Autonoma de Barcelona. [Downloadable!]
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