Access to Finance and Job Growth: Firm-Level Evidence Across Developing Countries

48 Pages Posted: 20 Apr 2016

See all articles by Meghana Ayyagari

Meghana Ayyagari

George Washington University - School of Business

Pedro Juarros

World Bank

Maria Soledad Martinez Peria

International Monetary Fund (IMF)

Sandeep Singh

World Bank

Date Written: March 16, 2016

Abstract

This paper investigates the effect of access to finance on job growth in 50,000 firms across 70 developing countries. Using the introduction of credit bureaus as an exogenous shock to the supply of credit, the paper finds that increased access to finance results in higher employment growth, especially among micro, small, and medium enterprises. The results are robust to using firm fixed effects, industry measures of external finance dependence, and propensity score matching in a complementary panel data set of more than four million firms in 29 developing countries. The findings have implications for policy interventions targeted to produce job growth in micro, small, and medium enterprises.

Keywords: Economic Theory & Research, Industrial Economics, Economic Growth

Suggested Citation

Ayyagari, Meghana and Juarros, Pedro and Martinez Peria, Maria Soledad and Singh, Sandeep, Access to Finance and Job Growth: Firm-Level Evidence Across Developing Countries (March 16, 2016). World Bank Policy Research Working Paper No. 7604. Available at SSRN: https://ssrn.com/abstract=2748867

Meghana Ayyagari (Contact Author)

George Washington University - School of Business ( email )

Washington, DC 20052
United States

Pedro Juarros

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Maria Soledad Martinez Peria

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Sandeep Singh

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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