Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others?

Evidence based on firm-level data from 89 countries with updated country-level data on financial structure suggests that in low-income countries; labor growth is more rapid in countries with a higher level of private credit/GDP. This positive relationship with private credit is especially pronounced...

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Main Authors:	Cull, Robert, L. Colin, Xu
Format:	Journal Article
Language:	en_US
Published:	Oxford University Press on behalf of the World Bank 2015
Subjects:	financial system financial institutions financial structure financial development credit market information asymmetries political economy stock market market capitalization
Online Access:	http://hdl.handle.net/10986/21621

id	okr-10986-21621
recordtype	oai_dc
spelling	okr-10986-216212021-04-23T14:04:03Z Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others? Cull, Robert L. Colin, Xu financial system financial institutions financial structure financial development credit market information asymmetries political economy stock market market capitalization Evidence based on firm-level data from 89 countries with updated country-level data on financial structure suggests that in low-income countries; labor growth is more rapid in countries with a higher level of private credit/GDP. This positive relationship with private credit is especially pronounced in industries that depend heavily on external finance. The results, which are robust to multiple estimation approaches, are consistent with the predictions of new structural economics. In high-income countries, labor growth rates increase with the level of stock market capitalization, consistent with predictions from new structural economics. However, the association disappears when stock market development is treated as an endogenous explanatory variable using instrumental variable regressions. There is no evidence that small-scale firms in low-income countries benefit the most from the development of the private credit market. Rather, the labor growth rates of larger firms increase to a greater extent than others with the level of private credit market development, a finding consistent with the perspective from historical political economy that banking systems in low-income countries serve the interests of the elite rather than providing broad-based access to financial services. 2015-03-19T14:23:24Z 2015-03-19T14:23:24Z 2013-09 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/21621 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Oxford University Press on behalf of the World Bank Publications & Research Publications & Research :: Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	financial system financial institutions financial structure financial development credit market information asymmetries political economy stock market market capitalization
spellingShingle	financial system financial institutions financial structure financial development credit market information asymmetries political economy stock market market capitalization Cull, Robert L. Colin, Xu Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others?
description	Evidence based on firm-level data from 89 countries with updated country-level data on financial structure suggests that in low-income countries; labor growth is more rapid in countries with a higher level of private credit/GDP. This positive relationship with private credit is especially pronounced in industries that depend heavily on external finance. The results, which are robust to multiple estimation approaches, are consistent with the predictions of new structural economics. In high-income countries, labor growth rates increase with the level of stock market capitalization, consistent with predictions from new structural economics. However, the association disappears when stock market development is treated as an endogenous explanatory variable using instrumental variable regressions. There is no evidence that small-scale firms in low-income countries benefit the most from the development of the private credit market. Rather, the labor growth rates of larger firms increase to a greater extent than others with the level of private credit market development, a finding consistent with the perspective from historical political economy that banking systems in low-income countries serve the interests of the elite rather than providing broad-based access to financial services.
format	Journal Article
author	Cull, Robert L. Colin, Xu
author_facet	Cull, Robert L. Colin, Xu
author_sort	Cull, Robert
title	Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others?
title_short	Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others?
title_full	Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others?
title_fullStr	Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others?
title_full_unstemmed	Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others?
title_sort	job growth and finance : are some financial institutions better suited to the early stages of development than others?
publisher	Oxford University Press on behalf of the World Bank
publishDate	2015
url	http://hdl.handle.net/10986/21621
_version_	1764448794015956992

Job Growth and Finance : Are Some Financial Institutions Better Suited to the Early Stages of Development than Others?

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