Publication:
The Role of Financial (Mis)allocation on Real (Mis)allocation: Firm-level Evidence for European Countries

Simple item page
dc.contributor.authorCusolito, Ana P.
dc.contributor.authorFattal-Jaef, Roberto N.
dc.contributor.authorMare, Davide S.
dc.contributor.authorSingh, Akshat V,
dc.date.accessioned2024-06-20T17:13:49Z
dc.date.available2024-06-20T17:13:49Z
dc.date.issued2024-06-20
dc.description.abstractThis paper leverages the novel methodology by Whited and Zhao (2021) to identify financial distortions and applies it to a sample of 24 European countries. The analyses reveal that less developed economies face more severe financial misallocation. Distortions in the allocation of financial resources raise the relative cost of finance for younger, smaller, and more productive firms. Counterfactual analysis indicates that alleviating financial distortions could boost aggregate productivity by approximately 30-70 percent. On average, 75 percent of these gains across countries result from better access to finance, with the remainder from optimizing the debt-to-equity ratio. The paper also quantifies the link between financial misallocation and real-input allocative inefficiency, showing that reducing financial misallocation from the median to the 25th percentile of the cross-industry distribution can increase aggregate productivity by an average of 5.2 percent. The effect is larger, at 6.4 percent, for industries heavily reliant on external finance.en
dc.identifierhttp://documents.worldbank.org/curated/en/099209006202418510/IDU170cb8cc3159d114ec819a091e6d322d7fb72
dc.identifier.doi10.1596/1813-9450-10811
dc.identifier.urihttps://hdl.handle.net/10986/41744
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 10811
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectTOTAL FACTOR PRODUCTIVITY
dc.subjectFINANCIAL MISALLOCATION
dc.subjectFINANCIAL FRICTIONS
dc.subjectECONOMIC GROWTH
dc.subjectDECENT WORK AND ECONOMIC GROWTH
dc.subjectSDG 8
dc.subjectPRIVATE SECTOR DEVELOPMENT
dc.subjectFINANCE AND GROWTH
dc.subjectFIRM DYNAMICS AND PRODUCTIVITY GROWTH
dc.titleThe Role of Financial (Mis)allocation on Real (Mis)allocationen
dc.title.subtitleFirm-level Evidence for European Countriesen
dc.typeWorking Paper
dspace.entity.typePublication
okr.date.disclosure2024-06-20
okr.date.lastmodified2024-06-20T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099209006202418510/IDU170cb8cc3159d114ec819a091e6d322d7fb72
okr.guid099209006202418510
okr.identifier.docmidIDU-70cb8cc3-59d1-4ec8-9a09-e6d322d7fb72
okr.identifier.doi10.1596/1813-9450-10811
okr.identifier.doihttps://doi.org/10.1596/1813-9450-10811
okr.identifier.externaldocumentum34345166
okr.identifier.internaldocumentum34345166
okr.identifier.reportWPS10811
okr.import.id4530
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099209006202418510/pdf/IDU170cb8cc3159d114ec819a091e6d322d7fb72.pdfen
okr.region.geographicalWorld
okr.topicMacroeconomics and Economic Growth::Economic Growth
okr.topicFinance and Financial Sector Development::Financial Regulation & Supervision
okr.topicPrivate Sector Development::Private Sector Economics
okr.unitDECRG: Finance & Priv Sec Devt (DECFP)
okr.unitGlobal Indicators Group - IFC (DECIG)
okr.unitOffice of the Chief Economist (ECACE)
okr.unitEnterprise Analysis-WB (DECEA)
relation.isAuthorOfPublicationca96ab93-217d-4359-a222-2481b357efdb
relation.isAuthorOfPublication.latestForDiscoveryca96ab93-217d-4359-a222-2481b357efdb
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
Files
Original bundle
Now showing 1 - 2 of 2
Thumbnail Image
Name:
IDU170cb8cc3159d114ec819a091e6d322d7fb72.pdf
Size:
918.26 KB
Format:
Adobe Portable Document Format
Download
No Thumbnail Available
Name:
IDU170cb8cc3159d114ec819a091e6d322d7fb72.txt
Size:
111.92 KB
Format:
Plain Text
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Plain Text
Description:
Download
Collections
Policy Research Working Papers