Reallocation, Competition and Productivity: Evidence from a Financial Liberalization Episode

Liliana Varela

No 225, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: This paper studies the impact of capital market distortions on misallocation, competition and aggregate productivity. Focusing on distortions in the access to international borrowing across firms, I show that a reduction in these distortions leads to an increase in aggregate productivity through two different channels. First, previously credit-constrained firms respond to better financing terms by increasing their investments in technology, a reallocation effect. Second, non-constrained firms also expand their investments in technology due to increased competition, a pro-competitive effect. I provide evidence for these two channels using firm-level census data around the deregulation of international financial flows in Hungary.

Date: 2015
New Economics Papers: this item is included in nep-bec
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Reallocation, Competition, and Productivity: Evidence from a Financial Liberalization Episode (2018)
Working Paper: Reallocation, competition, and productivity: evidence from a financial liberalization episode (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:225

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