Financial Development, Labor and Market Regulations and Growth

Raquel Fonseca () and Natalia Utrero-González ()

Finance from EconWPA

Abstract: This paper investigates the importance that market regulation and financial imperfections have on …rm growth. We analyse institutions affecting labor market as Employment Protection Laws (EP) and Product Market Regulation (PM). We show that together with the beneficial effects of …nancial development, a firm will get less financing, and thus invest less, in a weak financial market (finance effect), the strictness of product and labor market regulations also affect firm growth (labor effect). In particular, we show that the stricter the rules the more detrimental the influence on growth in sectoral value added for a large number of countries. We also show that the labor effect overcomes the positive finance effect.

Keywords: Financial development; labor and product market institutions; growth. (search for similar items in EconPapers)
JEL-codes: G2 G32 J32 L10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fin and nep-reg
Date: 2005-09-12
Note: Type of Document - pdf; pages: 30
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http://129.3.20.41/eps/fin/papers/0509/0509016.pdf (application/pdf)

Related works:
Working Paper: Financial Development, Labor and Market Regulations and Growth (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:0509016

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