Financial Constraints, Productivity, and Investment: Evidence from Lithuania
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Summary:
This paper studies the relation between firms' access to finance, labor productivity and investment using Lithuanian firm-level data from 2000–2018. To do so, we construct a measure of financial constraints. We estimate that, given firm characteristics, removing these constraints can improve average productivity and investment of firms in Lithuania by 0.51 percent and 7.2 percent, respectively. Our results further suggest that policies targeting firm age and size together will be more effective in mitigating the impact of financial constraints as the relationship between firm age and size with financial constraints exhibits non-linearities.
Series:
Working Paper No. 2022/249
Subject:
Aging Financial statements Labor productivity Population and demographics Production Productivity Public financial management (PFM)
Frequency:
regular
English
Publication Date:
December 9, 2022
ISBN/ISSN:
9798400227332/1018-5941
Stock No:
WPIEA2022249
Pages:
26
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