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Finance, firm size, and growth

Thorsten Beck, Asli Demirguc-Kunt, Luc Laeven and Ross Levine ()

No 3485, Policy Research Working Paper Series from The World Bank

Abstract: The authors examine whether financial development boosts the growth of small firms more than large firms and hence provides information on the mechanisms through which financial development fosters aggregate economic growth. They define an industry's technological firm size as the firm size implied by industrial specific production technologies, including capital intensities and scale economies. Using cross-industry, cross-country data, the results indicate that financial development exerts a disproportionately large effect on the growth of industries that are technologically more dependent on small firms. This suggests that financial development accelerates economic growth by removing growth constraints on small firms and also implies that financial development has sectoral as well as aggregate growth ramifications.

Keywords: Water and Industry; Economic Theory&Research; Public Health Promotion; Banks&Banking Reform; Health Monitoring&Evaluation; Water and Industry; Governance Indicators; Achieving Shared Growth; Small and Medium Size Enterprises; Economic Theory&Research (search for similar items in EconPapers)
Date: 2005-01-01
New Economics Papers: this item is included in nep-cfn, nep-dev, nep-ent and nep-mfd
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Related works:
Journal Article: Finance, Firm Size, and Growth (2008)
Journal Article: Finance, Firm Size, and Growth (2008) Downloads
Working Paper: Finance, firm size and growth (2008) Downloads
Working Paper: Finance, Firm Size, and Growth (2004) Downloads
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