Financial Constraints, Productivity, and Investment: Evidence from Lithuania
IMF Working Papers, December 9, 2022
Source details
- Canonical URL
- Financial Constraints, Productivity, and Investment: Evidence from Lithuania
Other formats
Bibliographic details
- Authors: Karim Foda, Yu Shi, Maryam Vaziri
- Published: December 9, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400227332.001
Overview
- Study period: 2000–2018.
- Data: Lithuanian firm-level data.
- Objective: Examine relation between firms' access to finance, labor productivity, and investment.
- Method: Construct a measure of financial constraints and estimate counterfactual impacts of removing these constraints given firm characteristics.
Key findings
- Removing financial constraints can improve average productivity of firms in Lithuania by 0.51 percent.
- Removing financial constraints can improve average investment of firms in Lithuania by 7.2 percent.
- The relationship between firm age and size with financial constraints exhibits non-linearities.
Policy implications and recommendations
- Policies that target firm age and firm size together will be more effective in mitigating the impact of financial constraints due to the non-linear interaction between age and size and financial constraints.
Content in this bundle
- Working Paper