Excess leverage and productivity growth in emerging economies:is there a threshold effect?


This paper studies the relationship between leverage and growth, focusing on a large sample of firms in emerging economies of central and eastern Europe (CEE). Contrary to the general wisdom, we find that deviation from optimal leverage, especially, excess leverage is common among firms in many CEE countries. Using firm-level panel data from a group of transition countries, the paper provides support to the hypothesis that leverage positively affects productivity growth but only below an endogenously determined threshold level.

Divisions: Aston Business School > Economics, Finance & Entrepreneurship
Aston Business School > Aston India Foundation for Applied Research
Aston Business School
Additional Information: © 2010 The Authors
Uncontrolled Keywords: leverage,growth,emerging economies,central Europe,eastern Europe,excess leverage,productivity growth
ISBN: IZA DP No. 4834
Full Text Link: http://ftp.iza.org/dp4834.pdf
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PURE Output Type: Discussion paper
Published Date: 2010-03
Authors: Coricelli, Fabrizio
Driffield, Nigel ( 0000-0003-1056-3117)
Pal, Sarmistha
Roland, Isabel



Version: Published Version

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