Business Intelligence

The Missing Link Between Financial Constraints And Productivity

Free registration required

Executive Summary

The global financial crisis has reopened the debate on the potential spillover effects from the financial sector to the real economy. This paper adds to that debate by providing new evidence on the link between finance and firm-level productivity, focusing on the case of Estonia. The author contributes to the literature in two important respects: (i) The author looks explicitly at the role of financial constraints; and (ii) also develops a methodology that corrects for the misspecification problems of previous studies. The results indicate that young and highly indebted firms tend to be more financially constrained.

  • Format: PDF
  • Size: 615.6 KB