Does Access to Credit Improve Productivity? Evidence from Bulgaria

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 Ordinary Least Squares (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.

Bibliographic Details

Main Authors:	Gatti, Roberta, Love, Inessa
Format:	Journal Article biblioteca
Language:	EN
Published:	2008
Subjects:	Production, Cost, Capital, Total Factor, and Multifactor Productivity, Capacity D240, Capital Budgeting, Fixed Investment and Inventory Studies G310, Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure G320, Socialist Enterprises and Their Transitions P310, Socialist Institutions and Their Transitions: Financial Economics P340,
Online Access:	http://hdl.handle.net/10986/5764
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