Financial Development, Property Rights, and Growth

The authors analyze how property rights
affect the allocation of firms' available resources
among different types of assets. In particular, they
investigate empirically for a large number of countries
whether firms in environments with more secure property
rights allocate available resources more toward intangible
assets and consequentially grow faster. The authors find
that improved asset allocation due to better property rights
has an effect on growth in sectoral value added equal to
improved access to financing arising from greater financial
development. The results are robust, using various samples
and specifications, including controlling for growth opportunities.