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This paper examines the effect of Basel III implementation on the access to finance of small and medium-size enterprises in 32 emerging markets and developing economies. Analyzing rich, repeated cross-sectional data and a panel of matched firm-bank data in a difference-in-differences setting with sample selection adjustment, the authors find a short-term, moderately negative effect of Basel III on small and medium-size enterprises' access to financing. The results suggest that firms with access to bank credit prior to Basel III implementation could have been affected less than firms that were initially on the fringes of financial inclusion-firms with only a bank account. The paper fails to find any additional heterogeneous effects across firm size or age, bank capitalization or liquidity, or across countries that transitioned to Basel III from Basel II versus Basel 2.5. Overall, the initial conditions of the banking system as well as of complementary business and financial regulation can co-determine the size of short-term costs from the newly implemented global financial regulation in emerging markets and developing economies.

Bank Regulation --- Basel III --- Emerging Market Economies --- Finance and Financial Sector Development --- Financial Regulation --- Financial Regulation and Supervision --- Firm-Level Data --- Impact Evaluation --- Private Sector Development --- Small and Medium Size Enterprises --- Small And Medium-Sized Enterprises --- SME Finance

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A unilateral trade reform generates two opposite effects: market access expansion and strengthening of competitive pressures in the liberalized market. Using detailed trade and firm-level data from France, the authors investigate how French firms' product scope and export sales changed after Chinese liberalization vis-a-vis Asian liberalization. The findings suggest that lower Chinese import tariffs account on average for 7 percent of the new products exported by French firms, and for 18 percent of additional French export sales. These results are robust when accounting for foreign competition faced by French firms in the liberalized market.

Economic Theory & Research --- Export margins and firm level data --- Finance and Financial Sector Development --- Foreign competition --- Free Trade --- Macroeconomics and Economic Growth --- Market access --- Markets and Market Access --- Microfinance --- Trade Policy --- Unilateral trade liberalization

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This paper examines the performance of globally engaged firms in Argentina in the past decade. Using highly disaggregated firm-level customs transaction data for imports and exports, the paper documents the progressive retreat of Argentine firms from global markets. Between 2007 and 2017, the number of exporters decreased by 30 percent. Benchmarking the characteristics of these exporters with similar countries reveals that Argentine exporters are disproportionally fewer and individually larger, with export value extremely concentrated in a few firms. Firm churning rates are disproportionately low and survival rates of entrants are high. These findings reflect exceptionally high entry costs of export, which are the result of anti-export bias and import substitution policies that sought unsuccessfully to develop the local industry. The paper shows that exporters that import directly intermediate and capital goods have better export outcomes than other exporters.

Allocative Efficiency --- Export Concentration --- Export Performance --- Exporter Dynamics --- Exporter Growth --- Firm Entry --- Firm-Level Data --- Global Market --- Import Substitution --- Imports --- Industrial Policy --- International Economics and Trade --- Private Sector Development --- Value Chain

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This paper presents new evidence that cronyism reduces long-term economic growth by discouraging firms' innovation activities. The analysis is based on novel establishment survey data from The Arab Republic of Egypt which provides information on establishments' political connections, their innovation activities, and their access to policy privileges. The analysis finds that the probability that firms invest in products new to the firm increases from under 1 percent for politically connected firms to over 7 percent for unconnected firms. The results are robust across different innovation measures. Despite innovating less, politically connected firms are more capital intensive, as they face lower marginal cost of capital due to the generous policy privileges they receive, including exclusive access to input subsidies, public procurement contracts, favorable exchange rates, and financing from politically connected banks. These privileges are largest when compared with their direct competitors operating in the same 4-digit sectors. The findings suggest that connected firms out-rival their competitors by lobbying for privileges instead of innovating. In the aggregate, these policy privileges reduce Egypt's long-term growth potential by diverting resources away from innovation to the inefficient capital accumulation of a few large, connected firms. A wide array of supporting evidence suggests that this effect is causal and not due to selection.

Access of Poor to Social Services --- Business Cycles and Stabilization Policies --- Common Carriers Industry --- Construction Industry --- Cronyism --- De Facto Governments --- Democratic Government --- Disability --- Economic Assistance --- Economic Growth --- Economic Theory and Research --- Energy Policies and Economics --- Energy Privatization --- Firm-Level Data --- Food and Beverage Industry --- General Manufacturing --- Governance --- Industrial Economics --- Innovation --- International Trade and Trade Rules --- Macroeconomics and Economic Growth --- Plastics and Rubber Industry --- Political Connections --- Private Sector Development --- Privatization --- Productivity --- Pulp and Paper Industry --- Resource Allocation --- Services and Transfers to Poor --- Textiles Apparel and Leather Industry