Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Releasing Constraints To Growth Or Pushing On A String ? The Impact Of Credit, Training, Business Associations, And Taxes On The Performance Of Mexican Micro-Firms

Releasing Constraints To Growth Or Pushing On A String ? The Impact Of Credit, Training, Business... WPS3807 Releasing Constraints to Growth or Pushing on a String? The Impact of Credit, Training, Business Associations and Taxes on the Performance of Mexican Micro-Firms Pablo Fajnzylber The World Bank William F. Maloney The World Bank Gabriel V. Montes Rojas University of Illinois at Urbana-Champaign Abstract: We employ propensity score matching and a traditional control function approach to examine the impact of participation in various societal institutions on micro-firm performance in Mexico. We find that firms that participate in credit markets, receive training, pay taxes and belong to business associations exhibit significantly higher profits, even after controlling for the various factors that drive participation in those institutions. We also find that firms that borrow from formal or informal sources and those that pay taxes are significantly more likely to stay in business, but firms that received credit exhibit lower rates of income growth. Overall, our results suggest that even if the best performing micro-firms are more likely to be selected into participating in societal institutions, causality also runs in the opposite direction. In particular, increases in strictly or broadly defined formality have the potential for increasing profits and survival rates, and appear to bring micro-firms closer to their optimal http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Policy Research Working Papers Unpaywall

Releasing Constraints To Growth Or Pushing On A String ? The Impact Of Credit, Training, Business Associations, And Taxes On The Performance Of Mexican Micro-Firms

45 pages

Loading next page...
 
/lp/unpaywall/releasing-constraints-to-growth-or-pushing-on-a-string-the-impact-of-ilaZYsivHr

References

References for this paper are not available at this time. We will be adding them shortly, thank you for your patience.

DOI
10.1596/1813-9450-3807
Publisher site
See Book on Publisher Site

Abstract

WPS3807 Releasing Constraints to Growth or Pushing on a String? The Impact of Credit, Training, Business Associations and Taxes on the Performance of Mexican Micro-Firms Pablo Fajnzylber The World Bank William F. Maloney The World Bank Gabriel V. Montes Rojas University of Illinois at Urbana-Champaign Abstract: We employ propensity score matching and a traditional control function approach to examine the impact of participation in various societal institutions on micro-firm performance in Mexico. We find that firms that participate in credit markets, receive training, pay taxes and belong to business associations exhibit significantly higher profits, even after controlling for the various factors that drive participation in those institutions. We also find that firms that borrow from formal or informal sources and those that pay taxes are significantly more likely to stay in business, but firms that received credit exhibit lower rates of income growth. Overall, our results suggest that even if the best performing micro-firms are more likely to be selected into participating in societal institutions, causality also runs in the opposite direction. In particular, increases in strictly or broadly defined formality have the potential for increasing profits and survival rates, and appear to bring micro-firms closer to their optimal

Published: Jan 1, 2006

There are no references for this article.