Ayyagari, MeghanaDemirguc-Kunt, AsliMaksimovic, Vojislav2014-02-052014-02-052013-12https://hdl.handle.net/10986/16934Survey data from 120 developing countries are used to examine the relation between establishment size and age in the formal sector. Existing research suggests that manufacturing establishments in developing countries do not grow over time, most likely because of market imperfections and regulations. To the contrary, this paper finds that the average plant in developing countries that is more than 40 years old employs almost five times as many workers as the average plant that is five years old or younger. The analysis finds consistent evidence when it looks within a large country, India, based on detailed manufacturing census data over 23 years. It also finds that differences in financial development across Indian states, while substantial, have a minor effect on firm growth, consistent with inefficiency of state-owned financial systems. These results hold controlling for differences in labor regulations across states, capital intensity, labor regulations, and firms born before and after the major reforms.en-USCC BY 3.0 IGOACCOUNTINGAGE GROUPAGE GROUPSBANK BRANCHESBANKING REFORMBANKING REGULATIONBANKING SECTORBANKING SERVICESBANKING SYSTEMBANKING SYSTEMSBANKSBRANCHBRANCHESBUSINESS ENVIRONMENTBUSINESS ENVIRONMENTSCAPITAL EXPENDITURESCAPITAL MARKETCOMMERCIAL BANKSCOMPANYCONTRACT LABORCORPORATE FINANCECORPORATIONSCORRELATIONSCOUNTRY COMPARISONSCREDIT LINESCROSS-SECTIONAL EVIDENCEDEPOSIT INSURANCEDEPOSITSDEVELOPMENT RESEARCHECONOMETRICSECONOMICSEMPLOYEEEMPLOYMENTEMPLOYMENT DYNAMICSEMPLOYMENT LEVELEMPLOYMENT LEVELSEMPLOYMENT PROTECTION LEGISLATIONENTREPRENEURIAL ACTIVITYENTREPRENEURSHIPEXPANSIONFINANCIAL INSTITUTIONSFINANCIAL MARKETSFINANCIAL STRUCTUREFINANCIAL SYSTEMSFIRM EXITFIRM GROWTHFIRM LEVELFIRM PERFORMANCEFIRM SIZEFIRM SIZE DISTRIBUTIONFIRMSFOREIGN BANKSINDUSTRY CHARACTERISTICSINFORMAL SECTORJOB CREATIONJOBSLABOR FORCELABOR INTENSITYLABOR LAWSLABOR MARKET INSTITUTIONSLABOR MARKET OUTCOMESLABOR MARKET REGULATIONLABOR MARKET REGULATIONSLABOR MARKETSLABOR PRODUCTIVITYLABOR REGULATIONLABOR REGULATIONSLABOURLABOUR MARKETLABOUR MARKET REGULATIONLAWSLEGISLATIONLICENSINGMACHINERYMACROECONOMICSMANUFACTURING ESTABLISHMENTMANUFACTURING ESTABLISHMENTSMANUFACTURING INDUSTRIESMERGERSMETHODOLOGYMIGRATIONNATIONALIZED BANKSPLANT SIZEPRIVATE BANKSPRIVATE SECTORPRIVATIZATIONPRODUCTION PROCESSPRODUCTIVITYPRODUCTIVITY IMPROVEMENTSREGIONAL RURAL BANKSRESEARCH WORKING PAPERSRESEARCHERSRESERVE BANK OF INDIARIGID LABOR MARKETSIZE OF FIRMSSMALL ENTERPRISESSMALL FIRMSMALL FIRMSSURVEY DATASURVEY INSTRUMENTSTOTAL EMPLOYMENTTRANSPORTUNEMPLOYMENTUNPAID FAMILY WORKERSWAGESWATER SUPPLYWORKERWORKERSfirm life cycleWorld Bank10.1596/1813-9450-6718