Farazi, Subika.
Investment under Risks and Uncertainty in Afghanistan Farazi, Subika. [electronic resource] / Farazi, Subika. - Washington, D.C. : The World Bank, 2018. - 1 online resource (38 p.) - Policy research working papers. World Bank e-Library. .
This paper investigates the state of low investment in Afghanistan by studying how investment decisions interact with risks and uncertainty in the presence of underdeveloped financial markets. The analysis shows that investing firms experience a higher probability of being affected by events related to crime and corruption and spend more on security arrangements. Firms that participate in the formal financial sector are also subject to higher levels of risk and uncertainty. As more productive firms face higher risks and uncertainty, a model of resource allocation with heterogeneous firms is used to quantify the economic loss from crime and corruption. The estimated aggregate output loss of 12 percent is significantly higher than the 7 percent loss observed in the absence of the resource allocation channel.
10.1596/1813-9450-8443
Access to Finance
Business Cycles and Stabilization Policies
Common Carriers Industry
Construction Industry
Crime and Society
Education
Educational Sciences
Finance and Financial Sector Development
Financial Frictions
Food and Beverage Industry
General Manufacturing
Industry
Investment Decisions
Macroeconomics and Economic Growth
Plastics and Rubber Industry
Pulp and Paper Industry
Risks
Social Development
Textiles Apparel and Leather Industry
Uncertainty
Investment under Risks and Uncertainty in Afghanistan Farazi, Subika. [electronic resource] / Farazi, Subika. - Washington, D.C. : The World Bank, 2018. - 1 online resource (38 p.) - Policy research working papers. World Bank e-Library. .
This paper investigates the state of low investment in Afghanistan by studying how investment decisions interact with risks and uncertainty in the presence of underdeveloped financial markets. The analysis shows that investing firms experience a higher probability of being affected by events related to crime and corruption and spend more on security arrangements. Firms that participate in the formal financial sector are also subject to higher levels of risk and uncertainty. As more productive firms face higher risks and uncertainty, a model of resource allocation with heterogeneous firms is used to quantify the economic loss from crime and corruption. The estimated aggregate output loss of 12 percent is significantly higher than the 7 percent loss observed in the absence of the resource allocation channel.
10.1596/1813-9450-8443
Access to Finance
Business Cycles and Stabilization Policies
Common Carriers Industry
Construction Industry
Crime and Society
Education
Educational Sciences
Finance and Financial Sector Development
Financial Frictions
Food and Beverage Industry
General Manufacturing
Industry
Investment Decisions
Macroeconomics and Economic Growth
Plastics and Rubber Industry
Pulp and Paper Industry
Risks
Social Development
Textiles Apparel and Leather Industry
Uncertainty