Using a survey of 41,862 manufacturing firms in Indonesia from 2004 through 2013, this study documents that firms in provinces with deeper financial infrastructure exhibit better performance in general; but this is true especially for firms with higher financial constraints (measured by a low-intensity use of fixed capital), and only when financial depth at the province level already exceeds a certain level. That is, this paper documents the presence of firm-level and province-level thresholds in the nexus between financial deepening and firm performance. It is important to consider such conditioning factors, in addition to boosting financial development, in order to improve manufacturing firms' performance and thus industrialization in Indonesia.

Thresholds in the nexus between financial deepening and firm performance: Evidence from Indonesia

Sergi B. S.
Ultimo
Membro del Collaboration Group
2019-01-01

Abstract

Using a survey of 41,862 manufacturing firms in Indonesia from 2004 through 2013, this study documents that firms in provinces with deeper financial infrastructure exhibit better performance in general; but this is true especially for firms with higher financial constraints (measured by a low-intensity use of fixed capital), and only when financial depth at the province level already exceeds a certain level. That is, this paper documents the presence of firm-level and province-level thresholds in the nexus between financial deepening and firm performance. It is important to consider such conditioning factors, in addition to boosting financial development, in order to improve manufacturing firms' performance and thus industrialization in Indonesia.
2019
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11570/3160497
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