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Local Financial Development And Firm Performance: Does Financial Outreach Really Matters Within Indonesian Archipelago?

Author

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  • Fickry Widya Nugraha

    (Bank Indonesia)

Abstract

This study attempt to examine whether firm’s performance depends on the local financialdevelopment across Indonesian provinces within 2010-2013. Combining data from the Indonesian survey of manufacturing firms with information from regional-level data, the study empirically documented several key findings. First, there are no consistent results that local bank availability is robustly associated with faster growth for firms in sectors with growth opportunities. Second, this paper documented a positive interplay between access to financial services to firm performance particularly within western part region of Indonesia. Third, access to the financial service appears to be closely connected with the level of economic development, particularly rate of poverty and inflation in the western part region of Indonesia.Taken these empirical finding together, this study imply that the level of inequality across Indonesian archipelago need to be reduced in order not only to provide a better access of financial services to the local stakeholders but also to improve small firms performance.

Suggested Citation

  • Fickry Widya Nugraha, 2017. "Local Financial Development And Firm Performance: Does Financial Outreach Really Matters Within Indonesian Archipelago?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 19(3), pages 287-318, January.
    • Handle: RePEc:idn:journl:v:19:y:2017:i:3b:p:287-318
    DOI: https://doi.org/10.21098/bemp.v19i3.667
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    References listed on IDEAS

    as
    1. Irwan Trinugroho & Agusman Agusman & Mochammad Doddy Ariefianto & Darsono Darsono & Amine Tarazi, 2015. "Determinants of cross regional disparity in financial deepening: Evidence from Indonesian provinces," Economics Bulletin, AccessEcon, vol. 35(2), pages 896-910.
    2. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-586, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Firm performance; local financial development; financial access;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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