02458cas a2200253 a 4500 AALejournalIMF005343 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451870879 1018-5941 BD-DhAAL BD-DhAAL Ueda, Kenichi. Banks and Labor as Stakeholders : Impact on Economic Performance / Kenichi Ueda, Stijn Claessens. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (39 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Traditionally, the impacts of the rights of financial institutions and workers on corporate performance have been analyzed independently. Yet, theory clearly indicates that the combination of relative powers of different stakeholders affects a firm overall performance. Using U.S. state level and state-industry level data, we investigate how output growth is affected by bank branch deregulation and employment protection occurring over 1972-1993. We find that financial liberalization positively impact overall state growth but greater workers' rights affects it ambiguously. At the industry level, however, employment protection promotes those industries that are more knowledge intensive, while the effect of financial liberalization does not differ across industries that vary in external financing dependency. The results hold controlling for changes in shareholders' rights, which itself is not significant. The findings suggest that financial liberalization operates mostly through an efficiency channel, better reallocating resources across sectors, while employment protection creates higher incentives and encourages more sector-specific, human capital investments. Overall, the results show that the strength of stakeholders' protection affects performance through efficiency channels and provide support for a stakeholders' view of corporate governance. Mode of access: Internet Claessens, Stijn. IMF Working Papers; Working Paper ; No. 2008/229 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/229/001.2008.issue-229-en.xml IMF e-Library