Faculty of Economics and Business Administration Publications Database

Local Financial Development and Firm Performance: Evidence from Marocco

Fafchamps, Marcel
Volume: 103
Pages: 15 - 28
Month: July
ISSN-Print: 0304-3878
Link External Source: Online Version
Year: 2013
Keywords: Manufacturing; Credit Constraint; Firm Size
Abstract: Combining data from the Moroccan census of manufacturing enterprises with information from a commune survey, we test whether firm expansion is affected by local financial development. Our findings are consistent with this hypothesis: local bank availability is robustly associated with faster growth for small and medium-size firms in sectors with growth opportunities, with a lower likelihood of firm exit and a higher likelihood of investment. Regarding the channel, the evidence suggests that, over the study period, access to credit was used by pre-existing Moroccan firms to mobilize investment funds, with some evidence that they were partly used towards reducing labor costs.