Unleashing Productivity through Firm Financing

Access to finance is critical to ensuring productive investments. Yet a myriad of financial distortions, frictions, and market failures can prevent the efficient allocation of financial resources toward the most productive firms and uses and negatively impact aggregate productivity and economic growth. Drawing from a newly constructed dataset of 2.5 million private firms, this report presents novel evidence about the productivity gains that low- and middle-income countries can obtain by removing financial distortions and fostering efficient and inclusive financial markets.