Finance and Productivity: A Literature Review

Abstract

This paper surveys a broad range of studies and highlights the main findings of the empirical literature regarding business finance and productivity. Numerous studies analyse the productivity effects of financial development and frictions. The results suggest the following: (1) Financial development likely has favourable effects on productivity growth, (2) financial frictions that impede the efficient flow of finance can mitigate the positive effects through a variety of channels and (3) the magnitudes of productivity costs of financial frictions generally appear modest in financially developed economies but are considerably larger in developing economies. The paper also reviews studies of the influence of specific mechanisms on productivity, such as human capital, corporate finance, financial sector efficiency, equity finance and venture capital. Some policies that hamper productivity growth include inefficient insolvency regimes that impede exit of low‐productivity firms, poorly developed contract monitoring and enforcement systems between banks and firms, collateral constraints that impair resource reallocation and imperfect bank supervisory practices that diminish productive capital reallocation through distorted lending practices.

Corruption, Regulatory Burden and Firm Productivity

“…The subsequent set of controls includes measures for firms' access to finance and the characteristics of managers. Access to finance is frequently cited as one of the biggest obstacles faced by firms in developing countries (Levine and Zervos, 1998;Beck et al, 2000;Benhabib and Spiegel 2000;Midrigan and Xu 2014;Heil, 2017). We use three measures of access to finance.…”

“…Building on the above literature, in this paper, we use firm-level survey data on 39,732 firms in 111 countries collected by the World Bank's Enterprise Surveys between 2009 and2017 to test the hypothesis that corruption impedes firm productivity more at higher levels of regulation.…”

Productivity and the Financial Services Sector – How to Achieve New Heights

“…well established in the literature (see, for example, Competition Bureau Canada 2017;de Serres et al 2006;Heil 2017;Levine 1997Levine , 2005and Lumpkin 2009). 2…”

Afetação de recursos, produtividade e as reformas estruturais da economia portuguesa

“…Quando a produtividade aumenta, as economias produzem mais para um dado nível de recursos utilizados, originando ganhos que aumentam o rendimento agregado e melhoram o nível médio de vida das famílias. Contudo, o crescimento da produtividade tem vindo a diminuir desde os anos 70 nos países desenvolvidos (Heil, 2017). Não é assim de estranhar o renovado interesse pelo estudo do comportamento da produtividade com a finalidade de desenvolver políticas que façam aumentar a mesma.…”