BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 29/2012:
Credit conditions and firm investment: Evidence from the MENA region
Risto Herrala ()
and Rima Turk Ariss ()
Abstract: The Arab Spring is a clear indicator of the urgency of
achieving inclusive growth and ensuring job creation in the Middle East and
North Africa (MENA) region, where private sector development is still
hindered by limited access to credit. Following Kiyotaki and Moore's (1997)
seminal model, we apply a novel methodological approach to a unique data
set of MENA firms to estimate credit limits and their impacts on capital
accumulation. Notably, we find higher credit limits in countries where the
Arab Spring erupted than in other MENA countries and that their marginal
effect on capital accumulation has been statistically and economically
significant.
Keywords: financing constraints; credit limits; MENA countries; (follow links to similar papers)
JEL-Codes: G31; L20; O16; (follow links to similar papers)
29 pages, November 28, 2012
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