| Abstract: |
The goal of this paper is to study the link between bank credit (and internal
funding) and average firm size in Argentina. Besides the fact that economic
growth tends to go hand in hand with larger firm size, the topic is of
particular interest because of the severe credit crunch in Argentina in the
aftermath of the 2001-2002 financial crisis. To this end, a novel three-digit
industry-level dataset spanning the 2000-2010 period was constructed. The
results confirm the expected positive impact of credit supply on average firm
size. Furthermore, the study expands on common knowledge by testing the
sensitivity of firm size to internal funding and the differential financing
behavior of the primary and the manufacturing sector. The results do not seem
to be driven by endogeneity bias. |