Access to Financing and Firm Growth: Evidence from Ethiopia

Author: Regasa, Dereje; Fielding, David; Roberts, Helen

Date: 2017-04

Publisher: University of Otago

Type: Working or discussion paper

Link to this item using this URL: http://hdl.handle.net/10523/7267

University of Otago

Abstract

Using Ethiopian firm-level data, we model the effect of different types of financing on firm growth. The form of financing is potentially endogenous to firm growth, and one contribution of this paper is to introduce a new instrumental variable which captures local variation in financial depth. Unlike previous studies of firms in low-income countries, we find evidence for a negative relationship between the use of external finance and firm growth, which suggests that there are substantial cross-country differences in the finance-growth nexus. We discuss possible explanations for this phenomenon and its implications for development policy.

Subjects: Ethiopia, firm growth, external financing

Citation: ["Regasa, D., Fielding, D., & Roberts, H. (2017). Access to Financing and Firm Growth: Evidence from Ethiopia (Economics Discussion Papers Series No. 1707). University of Otago. Retrieved from http://hdl.handle.net/10523/7267"]

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