TY - GEN AB - There are relatively few studies that use micro data to shed light on the relationship between finance and economic growth – the few that exists show that there is a positive relationship between debt and future productivity growth. Meanwhile, several new macro-econometric studies have shown that there is a threshold of financial development above which finance negatively impacts growth – our paper contributes to this literature by examining whether this finding holds when we examine firm level data. Our data covers over 100 countries, both advanced and developing & emerging and spans close to 30 years (1986-2014). Our preliminary results are the following: i) firm level leverage is positively associated with productivity; ii) the strength of this association declines in employment of the firm; iii) there is diminishing returns to leverage in terms of its impact on productivity but we don't see a threshold beyond which the returns drop; iv) aggregate leverage in a country has a negative effect on firm productivity, controlling for strength of institutions and level of economic and financial development in the country. Furthermore, given the potential issue of endogeneity, we examine the impact of leverage on expected and unexpected components of productivity – our results show that leverage is positively associated with the unexpected component of firm productivity, thus providing evidence against reverse causality. AU - Gomis, Roger M. AU - Khatiwada, Sameer CY - Geneva DA - 2017 DA - 2017 DO - 10.71609/iheid-tey1-r514 DO - doi ID - 294964 L1 - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf L1 - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf?subformat=pdfa L2 - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf L2 - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf?subformat=pdfa L4 - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf L4 - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf?subformat=pdfa LK - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf LK - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf?subformat=pdfa N2 - There are relatively few studies that use micro data to shed light on the relationship between finance and economic growth – the few that exists show that there is a positive relationship between debt and future productivity growth. Meanwhile, several new macro-econometric studies have shown that there is a threshold of financial development above which finance negatively impacts growth – our paper contributes to this literature by examining whether this finding holds when we examine firm level data. Our data covers over 100 countries, both advanced and developing & emerging and spans close to 30 years (1986-2014). Our preliminary results are the following: i) firm level leverage is positively associated with productivity; ii) the strength of this association declines in employment of the firm; iii) there is diminishing returns to leverage in terms of its impact on productivity but we don't see a threshold beyond which the returns drop; iv) aggregate leverage in a country has a negative effect on firm productivity, controlling for strength of institutions and level of economic and financial development in the country. Furthermore, given the potential issue of endogeneity, we examine the impact of leverage on expected and unexpected components of productivity – our results show that leverage is positively associated with the unexpected component of firm productivity, thus providing evidence against reverse causality. PB - The Graduate Institute, International Economics Department PP - Geneva PY - 2017 PY - 2017 T1 - Debt and productivityevidence from firm-level data TI - Debt and productivityevidence from firm-level data UR - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf UR - https://repository.graduateinstitute.ch/record/294964/files/HEIDWP04-2017.pdf?subformat=pdfa Y1 - 2017 ER -