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Financial Development and Growth in Direct Firm-Level Comparisons

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  • Jurajda, Å tÄ›pán
  • Bena, Jan

Abstract

The establishment of the EU-15 `single market' in 1993 brought about a high degree of similarity in firms' growth opportunities across countries, while substantial diversity existed in the development of national financial markets. We compare within-industry growth rates of similar `single-market' firms facing financial systems of different depth and institutional quality as of 1993. Moving from the least to the most developed financial market within the EU-15 boosts firms' annual value-added growth by about three percentage points. Our results also suggest that the growth gap due to initially under-developed financial systems was closed by 2003.

Suggested Citation

  • Jurajda, Å tÄ›pán & Bena, Jan, 2007. "Financial Development and Growth in Direct Firm-Level Comparisons," CEPR Discussion Papers 6395, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6395
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    Keywords

    Access to financial markets; Corporate growth; Financial development;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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