Financial Liberalization and the Industrial Response: Concentration and Entry in Malawi

Grant Kabango () and Alberto Paloni ()

World Development, 2011, vol. 39, issue 10, 1771-1783

Abstract: It has been suggested that financial liberalization may be a key policy to promote industrialization as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalization on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalization has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful.

Keywords: financial liberalization; industrial concentration; firm entry; external finance dependence; Africa; Malawi (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:39:y:2011:i:10:p:1771-1783

DOI: 10.1016/j.worlddev.2011.04.001

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