Financial Constraints, Tax Burdens, and Firm Growth: Evidence from Indonesia

Using a subjective measure of the constraints and data from World Bank Enterprise Survey, this paper investigates whether two business constraints, financial tax burdens, have same impact on Indonesian firm growth. This employs instrumental variable estimation to handle endogeneity problems finds that among examined in analyses, only constraint is binding has significantly negative growth, while taxes positive significant Based size classification, found large firms. Financial burdens are likely not be growth for small firms, benefits also these Further investigation reveals private manufacturing young firms more sensitive constraints.