Does access to credit improve productivity ? Evidence from Bulgarian firms, Vol. 1 of 1

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Does access to credit improve productivity ? Evidence from Bulgarian firms

Author:	Gatti, Roberta; Love, Inessa;	Collection Title:	Policy, Research working paper ; no. WPS 3921
Country:	Bulgaria;	Date Stored:	2006/05/11
Document Date:	2006/05/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	Europe and Central Asia
Report Number:	WPS3921	SubTopics:	Economic Theory & Research; Banks & Banking Reform; Economic Growth; Investment and Investment Climate; Financial Intermediation
Volume No:	1 of 1

Summary: Although it is widely accepted that financial development is associated with higher growth, the evidence on the channels through which credit affects growth on the micro-level is scant. Using data from a cross section of Bulgarian firms, the authors estimate the impact of access to credit (as proxied by indicators of whether firms have access to a credit or overdraft facility) on productivity. To overcome potential omitted variable bias of OLS estimates, they use information on firms' past growth to instrument for access to credit. The authors find credit to be positively and strongly associated with total factor productivity. These results are robust to a wide range of robustness checks.


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