Finance, firm size and growth

By Thorsten Beck, Asli Demirgüç-Kunt, Luc Laeven, Ross Levine. 2004

853 citations recorded by the source corpus.

This paper examines whether financial development boosts the growth of small firms more than large firms and hence provides information on the mechanisms through which financial development fosters aggregate economic growth. We define an industry's technological firm size as the firm size implied by industry specific production technologies, including capital intensities and scale economies. Using cross-industry, cross-country data, the results indicate that financial development exerts a disproportionately large effect on the growth of industries that are technologically more dependent on small firms. This suggests that financial development accelerates economic growth by removing growth constraints on small firms and also implies that financial development has sectoral as well as aggregate growth ramifications.(This abstract was borrowed from another version of this item.)

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/bd7d756341ddec08e91d0830beca96c53ae83936

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Citations in the corpus

Firm Exports and Multinational Activity Under Credit Constraints (2011, neutral): “20 See, for example, Gertler and Gilchrist (1994), Beck et al. (2008), and Guiso, Sapienza, & Zingales (2004). another source of variation in the data that we can exploit to identify the effect of credit frictions on firm exports.”
Where Is Credit Due? Legal Institutions, Connections, and the Efficiency of Bank Lending in Vietnam (2009, background): “Empirical research, in fact, finds that targeted efforts to change this equation by apportioning larger shares of credit for smaller enterprises have been ineffective (Beck et al. 2004a, 2004b, 2005) and even damaging (Adams et al. 1984).”
FINANCE AND DEVELOPMENT: A TALE OF TWO SECTORS (2011, background): “(1998), Rajan and Zingales (1998), and Beck et al. (2000), which report the market value of stock market capitalization.”
Banking Deregulation and Innovation (2013, background): “Our study relates to the literature that examines the real effects of financial development (e.g., Jayaratne and Strahan, 1996; Black and Strahan, 2002; Kerr and Nanda, 2009; Beck et al., 2008; Beck, Demirgüç-Kunt, and Maksimovic, 2004).”
Robust Inference With Multiway Clustering (2006, neutral): “It is not clear whether the small-sample correction of Bell and McCa¤rey (2002) for the variance of the OLS estimator with one-way clustering, used in Angrist and Lavy (2002) and Cameron et al.”
Credit Constraints, Heterogeneous Firms and International Trade (2013, positive): “Prior evidence suggests that smaller firms are more credit constrained (e.g. Beck et al. 2005; Forbes 2007).”
The Role of Finance in Economic Development: Benefits, Risks, and Politics (2011, background): “income-elastic than the development of the banking system (Beck et al., 2008).”
Big Constraints to Small Firms’ Growth? Business Environment and Employment Growth across Firms (2009, methodology): “Beck et al. (2005) is of particular interest here, as these authors include additional measures of corruption and property rights using the WBES firm-level data set. Using firms’ perceptions on potential constraints, they also find patterns across countries, with small firms benefiting most from gre”
Corporate Governance and Regulation: Can There Be Too Much of a Good Thing? (2007, positive): “9 As Beck et al. (2005) do, we find a very small positive correlation between Large Firm Share and External Dependence, which suggests that the industry characteristics explaining company size are not the same as the characteristics explaining technological dependence on external finance.”