{
  "title": "Financial Constraints, Productivity, and Investment: Evidence from Lithuania",
  "publication": "IMF Working Papers, December 9, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/12/09/financial-constraints-productivity-and-investment-evidence-from-lithuania-526844",
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  "summary": "This paper studies the relation between firms' access to finance, labor productivity and investment using Lithuanian firm-level data from 2000–2018. To do so, we construct a measure of financial constraints.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Study period: 2000–2018.\n- Data: Lithuanian firm-level data.\n- Objective: Examine relation between firms' access to finance, labor productivity, and investment.\n- Method: Construct a measure of financial constraints and estimate counterfactual impacts of removing these constraints given firm characteristics."
    },
    {
      "heading": "Key findings",
      "content": "- Removing financial constraints can improve average productivity of firms in Lithuania by 0.51 percent.\n- Removing financial constraints can improve average investment of firms in Lithuania by 7.2 percent.\n- The relationship between firm age and size with financial constraints exhibits non-linearities."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- 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.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/12/09/financial-constraints-productivity-and-investment-evidence-from-lithuania-526844"
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    "Authors: Karim Foda, Yu Shi, Maryam Vaziri",
    "Published: December 9, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400227332.001",
    "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.",
    "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.",
    "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.",
    "**Working Paper**"
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