The Contribution of Rapid Financial Development to Asymmetric Growth of Manufacturing Industries: Common Claims vs. Evidence for Poland
Journal of Economic Asymmetries, Vol. 1, No. 2, pp. 87-120, December 2004
48 Pages Posted: 8 Sep 2004
CEE countries such as Poland started to experience a very high rate of financial development within a few years after emerging from socialism. A review of the literature suggests that this asymmetric development should have been most beneficial for those industry sectors most dependent on external finance. However, the widely-used Rajan and Zingales (1998) measure of young (exchange-listed U.S.) companies' dependence on external finance had no explanatory power for the structure of industry growth in Poland. This negative finding held for 1990-2001 as a whole and for two distinct sub-periods that differed in the speed of financial development. Reasons for this failure, and correlates of the RZ measure, are examined.
Keywords: Financial Development, Dependence on External Finance, Industry Structure, Poland
JEL Classification: G20, G22, O14, O16
Suggested Citation: Suggested Citation