Date of Graduation

Spring 6-10-2016

Document Type

Thesis

Degree Name

Master of Science in International and Development Economics (MSIDEC)

College/School

College of Arts and Sciences

Department/Program

Economics

First Advisor

Professor Chakraborty

Abstract

In this paper I look to analyze whether bank loans have the ability to promote productivity for firms and also whether banks are more effective relative to other sources of lending such as the government. Using a panel dataset of 26,000 firms over the time period 1997-2014 I carry out multiple two-time period lagged OLS regressions with proxy variables for firm productivity as well as some control variables to observe the differences for bank against non-bank loans. The results yielded illustrate that non-bank loans did not have a positive relationship and that perhaps there is some form of zombie lending occurring. On the other hand bank loans were shown to have positive impacts in the second lag. This could mean a delayed positive impact from investing as it may take time for the benefits to be received.

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