Access to Financing and Firm Growth: Evidence from Ethiopia
Regasa, Dereje; Fielding, David; Roberts, Helen
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.
Publisher: University of Otago
Series number: 1707
Keywords: Ethiopia; firm growth; external financing
Research Type: Discussion Paper
The following licence files are associated with this item: