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Title:Financial development and TFP growth: Cross-country and industry-level evidence PDF Logo
Authors:Arizala, Francisco
Cavallo, Eduardo
Galindo, Arturo
Issue Date:2009
Series/Report no.:Working paper // Inter-American Development Bank, Research Department 682
Abstract:This paper estimates the impact of financial development on industry-level total factor productivity (TFP) growth using a largely unexploited panel of 77 countries with data for 26 manufacturing industries for the years 1963 to 2003. A significant relationship is found between financial development and industry-level TFP growth when controlling for country-time and industry-time fixed effects. The results are both statistically and economically significant. TFP growth can accelerate up to 0.6 percent per year, depending on the external finance requirement of industries, following a one standard deviation increase in financial development. The results are robust to different samples and specifications.
Subjects:Financial development
TFP growth
Volatility
JEL:D24
E44
O47
Document Type:Working Paper
Appears in Collections:Research Department Working Papers, Inter-American Development Bank

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