Reallocation, competition, and productivity: evidence from a financial liberalization episode

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This article studies the impact of distortions in the access to international capital markets on competition and productivity. I show that a reduction in these distortions leads to an increase in aggregate productivity through two different channels. First, firms that were previously credit constrained respond to better financing terms by increasing their investment in technology, a reallocation effect. Secondly, non-constrained firms also expand their investment in technology because of increased competition, a pro-competitive effect. I provide evidence for these two channels using firm-level census data from the deregulation of international financial flows in Hungary.

JEL-codes: F36 F43 O47 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2018-04
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Citations: View citations in EconPapers (33)

Published in Review of Economic Studies, April, 2018, 85(2), pp. 1279-1313. ISSN: 0034-6527

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http://eprints.lse.ac.uk/102060/ Open access version. (application/pdf)

Related works:
Journal Article: Reallocation, Competition, and Productivity: Evidence from a Financial Liberalization Episode (2018)
Working Paper: Reallocation, Competition and Productivity: Evidence from a Financial Liberalization Episode (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:102060

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