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Article Dans Une Revue Journal of International Money and Finance Année : 2012

When does leverage hurt productivity growth? A firm-level analysis

Fabrizio Coricelli
Nigel Driffield
  • Fonction : Auteur
Sarmistha Pal
  • Fonction : Auteur

Résumé

In the wake of the global financial crisis, several macroeconomic contributions have highlighted the risks of excessive credit expansion. In particular, too much finance can have a negative impact on growth. We examine the microeconomic foundations of this argument, positing a non-monotonic relationship between leverage and firm-level productivity growth in the spirit of the trade-off theory of capital structure. A threshold regression model estimated on a sample of Central and Eastern European countries confirms that TFP growth increases with leverage until the latter reaches a critical threshold beyond which leverage lowers TFP growth. This estimate can provide guidance to firms and policy makers on identifying "excessive" leverage. We find similar non-monotonic relationships between leverage and proxies for firm value. Our results are a first step in bridging the gap between the literature on optimal capital structure and the wider macro literature on the finance-growth nexus.

Dates et versions

hal-00818426 , version 1 (26-04-2013)

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Citer

Fabrizio Coricelli, Nigel Driffield, Sarmistha Pal, Isabelle Roland. When does leverage hurt productivity growth? A firm-level analysis. Journal of International Money and Finance, 2012, 31 (6), pp.1674-1694. ⟨10.1016/j.jimonfin.2012.03.006⟩. ⟨hal-00818426⟩
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