Does Access to Credit Improve Productivity? Evidence from Bulgarian Firms

Although it is widely accepted that financial development is associated with higher growth, the evidence on the channels through which credit affects growth on the micro-level is scant. Using data from a cross section of Bulgarian firms, the authors estimate the impact of access to credit (as proxied by indicators of whether firms have access to a credit or overdraft facility) on productivity. To overcome potential omitted variable bias of OLS estimates, they use information on firms' past growth to instrument for access to credit. The authors find credit to be positively and strongly associated with total factor productivity. These results are robust to a wide range of robustness checks.

Bibliographic Details

Main Authors:	Love, Inessa, Gatti, Roberta
Language:	English
Published:	World Bank, Washington, DC 2006-05
Subjects:	ANNUAL SALES, BANKING SECTOR, BANKS, BONDS, CAPITAL ACCUMULATION, CAPITAL INVESTMENT, CAPITAL STOCK, COMPARATIVE ANALYSIS, CONVENTIONAL WISDOM, CREDIT RATIONING, DEBT, DEVELOPMENT ECONOMICS, DIVIDENDS, ECONOMIC DEVELOPMENT, ECONOMIC EFFICIENCY, ECONOMIC GROWTH, ECONOMIC THEORY, EMPLOYMENT, EXOGENOUS VARIABLES, EXPORTS, FACTOR ACCUMULATION, FINANCIAL CRISIS, FINANCIAL SECTOR, FINANCIAL STRUCTURE, FISCAL POLICIES, FIXED ASSETS, FIXED CAPITAL, FOREIGN FIRMS, FOREIGN OWNERSHIP, GDP, GLOBAL MARKETS, INTEREST PAYMENTS, INTERMEDIATE INPUT, INVESTMENT CLIMATE, INVESTMENT DECISIONS, LARGE CITIES, LEVEL OF CAPITAL, LIQUIDITY, MERGERS, PRIVATE INVESTMENT, PRODUCTION FUNCTION, PRODUCTION FUNCTIONS, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROFITABILITY, PUBLIC SERVICES, SAVINGS, SAVINGS RATES, STOCK MARKETS, TANGIBLE ASSETS, TAX POLICY, TECHNOLOGICAL INNOVATION, TELECOMMUNICATIONS, TFP, TOTAL FACTOR PRODUCTIVITY, TRADE LIBERALIZATION, TRANSACTION COSTS, TRANSITION ECONOMIES, TREASURY BONDS, USE VALUE, VALUE ADDED, WAGES,
Online Access:	http://documents.worldbank.org/curated/en/2006/05/6783614/access-credit-improve-productivity-evidence-bulgarian-firms https://hdl.handle.net/10986/8662
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