Unbundling Institutions for External Finance : Worldwide Firm-Level Evidence

Knack, Steve ; Xu, Lixin Colin

World Bank, Washington, DC

关键词: DEPOSIT;    BORROWER;    CONTRACT RIGHTS;    ECONOMIC GROWTH;    TRADE CREDIT;   

DOI  :  10.1596/1813-9450-7287
RP-ID  :  WPS7287

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The empirical literature on institutionsand development has been challenged on grounds of reversecausality, measurement error in institutional indicators,and heterogeneity. This paper uses firm-level data acrosscountries to confront these challenges. Instead of analyzingultimate outcomes, such as income levels where institutionalquality is likely endogenous, the focus is on firm-levelexternal finance. Moreover, institutions are “unbundled” toexplore how various types of institutions affect externalfinance differently. The paper documents that micro firmshave significantly less access to external finance thansmall and medium firms. General financial development andcontracting institutions that facilitate transactionsbetween private parties exert little effect, on average, onfirms’ access to external finance. In contrast, propertyrights institutions that constrain political and economicelites exhibit stronger positive association with access toexternal finance. The analysis finds evidence of attenuationbias associated with error in measuring institutions. Forleveling the playing fieldbetween elite and non-elitefirms (as proxied by firm size) in their access to externalfinance, property rights institutions also figure moreprominently—with an important exception for the informationenvironment, a component of contracting institutions. Theresults indicate that a specific channel through whichdevelopment is affected more by property rights institutionsrather than contracting institutions is external financingfor firms.