Shocks, financial dependence and efficiency: Evidence from U.S. and Canadian industries

Marcello Estevão and Tiago Severo

Canadian Journal of Economics, 2014, vol. 47, issue 2, 442-465

Abstract: This paper investigates how changes in industries funding costs affect total factor productivity (TFP) growth. Based on panel regressions using data for U.S. and Canadian industries and industries dependence on external funding as an identification mechanism, we show that increases in the cost of funds affect TFP growth negatively. The effect is nonmonotonic depending on a sector's external finance need. This paper presents a theoretical model that produces the observed nonmonotonic effect of financial shocks on TFP growth and suggests that financial shocks distort the allocation of factors across firms even within an industry, thus reducing TFP growth.

JEL-codes: E23 E32 E44 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/caje.12078 (text/html)
access restricted to subscribers

Related works:
Journal Article: Shocks, financial dependence and efficiency: Evidence from U.S. and Canadian industries (2014)
Working Paper: Shocks, Financial Dependence, and Efficiency: Evidence From U.S. and Canadian Industries (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:47:y:2014:i:2:p:442-465

Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php

Access Statistics for this article

Canadian Journal of Economics is currently edited by Zhiqi Chen

More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().