Credit market institutions and firm imports of capital goods: Evidence from developing countries

Institutional reform improves access to credit to finance the capital imports. * External finance intensive firms benefit most from better institutions. * First-time importers may particularly benefit from better institutions. * The input import decision is not subject to credit constraints. Using firm-level data across seven developing countries, this paper studies the interaction between a firm's wealth and a country's credit market institutions on machinery and equipment imports (=capital imports). The panel analysis suggests that credit constraints have a negative impact on the capital imp... Mehr ...