The effect of different sources of fundining on firm performance: evidence from Chile

Abstract

This study analyses the impact of different funding sources—public and private—on firm’s sales performance, labor productivity, and capital productivity of Chilean firms. We use data from the Chilean Longitudinal Survey of Firms (2013–2019), fixed-effects econometric models were employed for their robustfit and reliability. The findings show that funding through capital and bond issuance positively influences all three performance measures, while supplier credit, non-bank funding, and public funding enhance sales and labor productivity but not capital productivity. Firm characteristics, including age, industrial sector, group affiliation, and export activity, also significantly affect performance, with export activity negatively impacting capital productivity. This research makes a unique contribution by disaggregating funding into distinct categories and addressing a notable gap in Latin American studies, offering detailed insights into the funding-performance relationship in this regional context.