The impact of local financial development on firm growth in Vietnam: Does the level of corruption matter? |
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| Institution: | 1. Georg-August-University of Goettingen, Germany;2. Vietnam National University of Forestry, Viet Nam;1. Max Planck Institute for Tax Law and Public Finance, Marstallplatz 1, D-80539, Munich, Germany;2. University of Munich, Germany;3. CESifo, Germany;4. Sydney University Law School, Australia;1. Department of Economics, Florida International University, FL, 33199, USA;2. Department of Economics, Deakin University, Victoria, 3125, Australia;1. National Research University Higher School of Economics, Russia;2. Bocconi University, Italy;1. Departamento de Análisis Económico, Universidad de Zaragoza, Zaragoza, Spain;2. Universidad San Jorge, Zaragoza, Spain |
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| Abstract: | We examine the effects of province-level financial development and corruption on the performance of Vietnamese firms in terms of the growth rates of sales, investment and sales per worker. Employing a large firm-level dataset of more than 40,000 firms for the period 2009–2013 and applying a heteroskedasticity-based identification strategy, we find that province-level financial development promotes firm growth, while corruption hinders it. Most importantly, the marginal effect of financial development on firm growth depends negatively on the level of corruption. Moreover, financial development exacerbates the growth-retarding effect of corruption. |
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| Keywords: | Local financial development Firm growth Corruption Heteroskedasticity-based identification Multiplicative interaction model D73 G21 O12 O16 O17 O43 |
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