The Historical Roots of Firm Access to Finance: Evidence from the African Slave Trade
Washington University, Saint Louis - John M. Olin School of Business
University of California, Los Angeles (UCLA) - Anderson School of Management
May 1, 2013
This paper shows that access to finance is the crucial factor in explaining the link between the historical African slave trade and current GDP. We show: (1) The slave trade is strongly linked to current firm access to finance; (2) Among all the business obstacles a firm faces, the slave trade affects only access to finance; and (3) The slave trade erodes access to both formal credit and the trade credit thought to be its substitute. The results suggest a causal link between culture and finance that helps explain the pivotal role of both trust and finance in economic development.
Number of Pages in PDF File: 46
Keywords: Trust, Social Capital, Finance, Africa, Growth, Developmentworking papers series
Date posted: December 5, 2012 ; Last revised: May 5, 2013
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