IMF Working Papers Volume 2010 Issue 049: Firm Productivity, innovation and Financial Development (2010)

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Firm Productivity, innovation and Financial Development

Author:

Ms. Genevieve Verdier

Ms. Genevieve Verdier
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Erasmus Kersting

Erasmus Kersting
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Ms. Era Dabla-Norris

Ms. Era Dabla-Norris
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Series:: IMF Working Papers

Volume/Issue:: Volume 2010: Issue 049

Publication Date:: 01 Feb 2010

DOI:: https://doi.org/10.5089/9781451963250.001

ISBN:: 9781451963250

ISSN:: 1018-5941

Pages:: 36

Keywords:: WP; firm performance; dependent variable; book value; cost of capital; financial system; high-tech firm; industry dummy; innovation; labor productivity; total factor productivity; survey data; financial development.; firm productivity; enterprise manager; low-technology firm; Financial sector development; Emerging technologies; Productivity; Capacity utilization; Global; Central and Eastern Europe; Central Asia

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2010: Issue 049

Language:: English

Publication Date:: 01 Feb 2010

DOI:: https://doi.org/10.5089/9781451963250.001

ISBN:: 9781451963250

ISSN:: 1018-5941

Pages:: 36

Keywords:: WP; firm performance; dependent variable; book value; cost of capital; financial system; high-tech firm; industry dummy; innovation; labor productivity; total factor productivity; survey data; financial development.; firm productivity; enterprise manager; low-technology firm; Financial sector development; Emerging technologies; Productivity; Capacity utilization; Global; Central and Eastern Europe; Central Asia

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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How do firm-specific actions-in particular, innovation-affect firm productivity? And what is the role of the financial sector in facilitating higher productivity? Using a rich firm-level dataset, we find that innovation is crucial for firm performance as it directly and measurably increases productivity. Moreover, its effects on productivity are mediated through the financial sector; firms reap the maximum benefits from innovation in countries with well-developed financial sectors. This effect is particularly important for firms in high-tech sectors, which typically have higher external financing needs.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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