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Credit constraints and investment in human capital: Training evidence from transition economies

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  • Popov, Alexander

Abstract

Using a unique survey database of 8265 firms from 25 transition economies, I find that lack of access to finance in general, and to bank credit in particular, is associated with significantly lower investment in on-the-job training. This effect is stronger in education-intensive industries and in industries facing good global growth opportunities. To address endogeneity issues, I use the structure of local credit markets as an instrument for credit constraints at the firm-level. In addition, in panel estimates, I control for the presence of unobserved firm-level heterogeneity, as well as for changes in macroeconomic conditions.

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  • Popov, Alexander, 2014. "Credit constraints and investment in human capital: Training evidence from transition economies," Journal of Financial Intermediation, Elsevier, vol. 23(1), pages 76-100.
    • Handle: RePEc:eee:jfinin:v:23:y:2014:i:1:p:76-100
    DOI: 10.1016/j.jfi.2013.11.003
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    Keywords

    Credit constraints; Human capital; On-the-job training;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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