NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Does Financing Spur Small Business Productivity? Evidence from a Natural Experiment

Karthik Krishnan, Debarshi Nandy, Manju Puri

NBER Working Paper No. 20149
Issued in May 2014
NBER Program(s):   CF   PR

We analyze how increased access to financing affects firm total factor productivity (TFP) by exploiting a natural experiment following interstate banking deregulations which increased access to bank financing. We find that firms' TFP increases after their states implement these deregulations. Using a regression discontinuity approach based on Small Business Administration's funding eligibility criteria, we show that TFP increases following the deregulations are significantly greater for financially constrained firms. Our results suggest that greater access to financing allows financially constrained firms to invest in productive projects that may otherwise not be taken up.

download in pdf format
   (364 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20149

Published: Karthik Krishnan & Debarshi K. Nandy & Manju Puri, 2015. "Does Financing Spur Small Business Productivity? Evidence from a Natural Experiment," Review of Financial Studies, Society for Financial Studies, vol. 28(6), pages 1768-1809. citation courtesy of

Users who downloaded this paper also downloaded* these:
Agrawal, Catalini, and Goldfarb w19133 Some Simple Economics of Crowdfunding
Banerjee, Meng, Porzio, and Qian w20050 Aggregate Fertility and Household Savings: A General Equilibrium Analysis using Micro Data
Mian and Sufi w20152 House Price Gains and U.S. Household Spending from 2002 to 2006
Hellmann and Thiele w20147 Friends or Foes: The Interrelationship between Angel and Venture Capital Markets
Hall w20183 Quantifying the Lasting Harm to the U.S. Economy from the Financial Crisis
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us