Fajnzylber, PabloMaloney, William F.Montes-Rojas, Gabriel V.2012-03-302012-03-302009Journal of Development Studies00220388https://hdl.handle.net/10986/5710Using firm-level data from Mexico, this paper investigates the firm characteristics associated with participation in credit markets, access to training, tax payments, and membership in business associations. We find that firms which participate in these institutions exhibit significantly higher profits. Moreover, firms that borrow from formal or informal sources and those that pay taxes are significantly more likely to stay in business but firms that received credit exhibit lower rates of income growth. These results persist when firm characteristics that are arguably correlated with unobserved entrepreneurial ability are controlled for. Our findings suggest that the significant within-country differences in firm productivity observed in developing economies are due in part to market and government failures that limit the ability of micro-firms to reach their optimal sizes.ENFinancing PolicyFinancial Risk and Risk ManagementCapital and Ownership Structure G320Firm Performance: Size, Diversification, and Scope L250Entrepreneurship L260Economic Development: Financial MarketsSaving and Capital InvestmentCorporate Finance and Governance O160Journal ArticleWorld Bank