The impact of local financial development on firm growth in Vietnam: Does the level of corruption matter?

Viet T. Tran, Yabibal Walle and Helmut Herwartz

European Journal of Political Economy, 2020, vol. 62, issue C

Abstract: We examine the effects of province-level financial development and corruption on the performance of Vietnamese firms in terms of the growth rates of sales, investment and sales per worker. Employing a large firm-level dataset of more than 40,000 firms for the period 2009–2013 and applying a heteroskedasticity-based identification strategy, we find that province-level financial development promotes firm growth, while corruption hinders it. Most importantly, the marginal effect of financial development on firm growth depends negatively on the level of corruption. Moreover, financial development exacerbates the growth-retarding effect of corruption.

Keywords: Local financial development; Firm growth; Corruption; Heteroskedasticity-based identification; Multiplicative interaction model (search for similar items in EconPapers)
JEL-codes: D73 G21 O12 O16 O17 O43 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:62:y:2020:i:c:s0176268020300069

DOI: 10.1016/j.ejpoleco.2020.101858

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