Credit conditions and firm investment : Evidence from the MENA region
Herrala, Risto; Turk-Ariss, Rima (01.12.2012)
JulkaisusarjaBOFIT Discussion Papers
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-201408071955
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 JEL: G31, L20, O16
Published in Journal of International Money and Finance, Volume 64, June 2016, Pages 1–15 as "Capital accumulation in a politically unstable region"