Financial Development and Growth in Direct Firm-Level Comparisons

Jan Bena and Stepan Jurajda

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: The establishment of the EU-15 'single market' in 1993 brought about a high degree of synchronization of industry shocks, while substantial diversity existed in the development of country-level financial markets. We compare within-industry growth rates of similar 'single-market' firms facing financial systems of different depth and institutional quality as of 1993. Moving from the least to the most developed financial market within the EU- 15 boosts firms' annual value-added growth by about three percentage points. Our results also suggest that the growth gap due to initially under-developed financial systems was closed by 2003.

Keywords: Financial development; Corporate growth; Access to financial markets. (search for similar items in EconPapers)
JEL-codes: F36 G15 G21 O16 O52 (search for similar items in EconPapers)
Date: 2007-03
New Economics Papers: this item is included in nep-fdg
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Working Paper: Financial Development and Growth in Direct Firm-Level Comparisons (2007)
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