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Finance, Firm Size, and Growth

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  • THORSTEN BECK
  • ASLI DEMIRGUC‐KUNT
  • LUC LAEVEN
  • ROSS LEVINE

Abstract

Although research shows that financial development accelerates aggregate economic growth, economists have not resolved conflicting theoretical predictions and ongoing policy disputes about the cross‐firm distributional effects of financial development. Using cross‐industry, cross‐country data, the results are consistent with the view that financial development exerts a disproportionately positive effect on small firms. These results have implications for understanding the political economy of financial sector reform.

Suggested Citation

  • Thorsten Beck & Asli Demirguc‐Kunt & Luc Laeven & Ross Levine, 2008. "Finance, Firm Size, and Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(7), pages 1379-1405, October.
    • Handle: RePEc:wly:jmoncb:v:40:y:2008:i:7:p:1379-1405
    DOI: 10.1111/j.1538-4616.2008.00164.x
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    More about this item

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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