Property Rights and Finance
John McMillan and
Christopher Woodruff ()
No 8852, NBER Working Papers from National Bureau of Economic Research, Inc
Which is the tighter constraint on private sector investment: weak property rights or limited access to external finance? From a survey of new firms in post-communist countries, we find that weak property rights discourage firms from reinvesting their profits, even when bank loans are available. Where property rights are relatively strong, firms reinvest their profits; where they are relatively weak, entrepreneurs do not want to invest from retained earnings.
JEL-codes: D23 P23 (search for similar items in EconPapers)
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Published as Johnson, Simon, John McMillan and Christoher Woodruff. "Property Rights And Finance," American Economic Review, 2002, v92(5,Dec), 1335-1356.
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