Excess leverage and productivity growth in emerging economies: is there a threshold effect?

Fabrizio Coricelli, Nigel Driffield, Sarmistha Pal, Isabel Roland

Research output: Preprint or Working paperDiscussion paper

Abstract

This paper studies the relationship between leverage and growth, focusing on a large sample of firms in emerging economies of central and eastern Europe (CEE). Contrary to the general wisdom, we find that deviation from optimal leverage, especially, excess leverage is common among firms in many CEE countries. Using firm-level panel data from a group of transition countries, the paper provides support to the hypothesis that leverage positively affects productivity growth but only below an endogenously determined threshold level.
Original languageEnglish
Place of PublicationBonn (DE)
PublisherIZA
Number of pages47
Volume4834
ISBN (Print)IZA DP No. 4834
Publication statusPublished - Mar 2010

Publication series

NameDiscussion Paper
PublisherIZA
No.4834

Bibliographical note

© 2010 The Authors

Keywords

  • leverage
  • growth
  • emerging economies
  • central Europe
  • eastern Europe
  • excess leverage
  • productivity growth

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