Credit constraints and productivity of SMEs: Evidence from Canada |
| |
Affiliation: | 1. European Central Bank, Sonnemannstrasse 20, D-60314 Frankfurt am Main, Germany;2. Kelley School of Business, Indiana University, 1275 E 10th St, Bloomington, IN 47405, United States |
| |
Abstract: | To what extent firms are constrained by external credit is usually unobserved in commonly used firm-level data. We use a survey of financing among Canadian small and medium-sized enterprises to measure the likelihood of a firm being constrained by credit. We find that firm size, current debt-to-asset ratio and cash flow are robust indicators of being financially constrained, while long-term debt to asset ratio is not a significant indicator of credit constraints. We then estimate the firm-level total factor productivity, taking into account the measured credit constraints. Omitting credit constraints leads to an upward bias of productivity estimates, by 4 percent. In addition, we find no strong evidence that suggests credit constraints lead to slower productivity growth. Finally, we confirm that both investment and employment growth are negatively affected by the measured credit constraints. |
| |
Keywords: | Productivity Financial constraint Firm growth D24 G32 L25 |
本文献已被 ScienceDirect 等数据库收录! |
|