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How Important Are Financing Constraints? The Role of Finance in the Business Environment

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creativeworkseries.issn1564-698X
dc.contributor.authorAyyagari, Meghana
dc.contributor.authorDemirgüç-Kunt, Asli
dc.contributor.authorMaksimovic, Vojislav
dc.date.accessioned2012-03-30T07:12:37Z
dc.date.available2012-03-30T07:12:37Z
dc.date.issued2008-12-01
dc.description.abstractWhat role does the business environment play in promoting or restraining firm growth? Recent literature points to a number of factors as obstacles to growth. Inefficient functioning of financial markets, inadequate security and enforcement of property rights, poor provision of infrastructure, inefficient regulation and taxation, and broader governance features such as corruption and macroeconomic stability are all discussed without any comparative evidence on their ordering. Using firm-level survey data on the relative importance of different features of the business environment, the article finds that although firms report many obstacles to growth, not all the obstacles are equally constraining. Some affect firm growth only indirectly through their influence on other obstacles, or not at all. Analyses using directed acyclic graph methodology and regressions find that only obstacles related to finance, crime, and policy instability directly affect firm growth. The finance result is shown to be the most robust. The results have important implications for the priority of reforms. Maintaining policy stability, keeping crime under control, and undertaking financial sector reforms to relax financing constraints are likely to be the most effective routes to promote firm growth.en
dc.identifier.citationWorld Bank Economic Review
dc.identifier.doi10.1596/4489
dc.identifier.issn1564-698X
dc.identifier.urihttps://hdl.handle.net/10986/4489
dc.publisherWorld Bank
dc.relation.ispartofseriesWorld Bank Economic Review
dc.rightsCC BY-NC-ND 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/igo
dc.subjectbiases
dc.subjectcorruption
dc.subjecteconomic development
dc.subjectfinancial markets
dc.subjectfinancial sector reforms
dc.subjectfinancing obstacles
dc.subjectgovernment policies
dc.subjectinternational bank
dc.subjectobstacles to growth
dc.subjectproperty rights
dc.titleHow Important Are Financing Constraints? The Role of Finance in the Business Environmenten
dc.typeJournal Articleen
dc.typeArticle de journalfr
dc.typeArtículo de revistaes
dspace.entity.typePublication
okr.date.doiregistration2025-05-06T11:11:12.743370Z
okr.doctypeJournal Article
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticePoverty
okr.globalpracticeEnvironment and Natural Resources
okr.globalpracticeFinance and Markets
okr.globalpracticeTrade and Competitiveness
okr.identifier.report3
okr.language.supporteden
okr.pagenumber483
okr.pagenumber516
okr.pdfurlwber_22_3_483.pdfen
okr.peerreviewAcademic Peer Review
okr.region.countryUzbekistan
okr.region.countrySingapore
okr.region.countryUruguay
okr.region.countryWallis and Futuna Islands
okr.topicEnvironment
okr.topicMacroeconomics and Economic Growth
okr.topicFinance and Financial Sector Development::Access to Finance
okr.topicEnvironmental Economics and Policies
okr.topicPrivate Sector Development::Emerging Markets
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicBanks and Banking Reform
okr.topicFinance and Financial Sector Development::Bankruptcy and Resolution of Financial Distress
okr.topicFinance and Financial Sector Development::Microfinance
okr.topicEconomic Theory and Research
okr.topicPoverty Reduction::Pro-Poor Growth
okr.topicFinance and Financial Sector Development::Financial Intermediation
okr.volume22
relation.isAuthorOfPublication234a20c0-893c-561a-8c90-6f5be5be5b9b
relation.isAuthorOfPublication.latestForDiscovery234a20c0-893c-561a-8c90-6f5be5be5b9b
relation.isJournalIssueOfPublication209ea377-1596-4a5d-911e-b0f76aec7c05
relation.isJournalIssueOfPublication.latestForDiscovery209ea377-1596-4a5d-911e-b0f76aec7c05
relation.isJournalOfPublicationc41eae2f-cf94-449d-86b7-f062aebe893f
relation.isJournalVolumeOfPublication4c8baec9-4fd4-4228-8add-184b554e4a53
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