DP6395 Financial Development and Growth in Direct Firm-Level Comparisons
Author(s): | Jan Bena, Stepan Jurajda |
Publication Date: | July 2007 |
Keyword(s): | Access to financial markets, Corporate growth, Financial development |
JEL(s): | F36, G15, G21, O16, O52 |
Programme Areas: | Financial Economics |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=6395 |
The establishment of the EU-15 `single market' in 1993 brought about a high degree of similarity in firms' growth opportunities across countries, while substantial diversity existed in the development of national 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.