【正文】 m. Schiffer and Weder (2001) show that small firms consistently report higher growth obstacles than mediumsize or large firms. Beck, DemirgucKunt, Laeven and Maksimovic (2006) show that size, age and ownership are the most reliable predictors of firms’ financing obstacles. The authors find that older, larger and foreignowned firms report lower financing obstacles. The relationship is not only statistically but also economically significant. The probability that a small firm lists financing as a major obstacle (as opposed to moderate, minor or no obstacle) is 39% pared to 36% for mediumsize firms and 32% for large firms. The higher financing obstacles that small firms report match not only anecdotal evidence from both developed and developing countries, they also confirm theory’s a world with fixed transaction costs and information asymmetries, small firms with demand for smaller loans face higher transaction costs and face higher risk premiums since they are typically more opaque and have less collateral to offer.Not surprisingly, the data also show that small firms finance a smaller share of their investment with formal sources of external finance (Beck, DemirgucKunt and Maksimovic,As shown in Figure 3, small firms finance on average 13 percentage points less ofinvestment with bank finance pared to large firms. While there are no significant differences in the case of lease finance, larger firms finance a greater share of investment with equity and –perhaps surprisingly – with development finance than small firms. On the other hand, smaller firms finance a larger share of investment with informal sources of finance, such as moneylenders or family and friends.Do the higher financing obstacles that small firms report actually constrain their growth or do they find ways around these obstacles? Beck, DemirgucKunt and Maksimovic (2005) find that the higher obstacles faced by smaller firms indeed translate into slower growth. As shown in Figure 4, small firms’ financing obstacles have almost twice the effect on annual growth that large firms’ financing obstacles do. The difference is even stronger in the case of growth constraints related to the legal system and to corruption, where small firms suffer more than three times as much in the form of slower growth as large firms. Small firms thus do not only report facing higher growth obstacles, these higher obstacles are also more constraining for their operation and growth than in the case of mediumsize and large firms.. Financing constraints, access to finance and growth: the importance of institutionsThe newly available crosscountry firmlevel surveys do not only allow researchers to assess the differences in financing constraints and patterns across firms of different sizes, but also to explore the effect of different policies on these differences. Beck, DemirgucKunt,Laeven and Maksimovic (2006) show that institutional development, broadly defined, is the most significant country characteristic that can explain crosscountry variation in firms’ financing obstacles, even after controlling for crosscountry ine per capita variation. Firms in countries with higher levels of institutional development report significantly lower financing obstacles than firms in countries with less developed institutions. The positive effect of financial and institutional development can also be observed in the use of external finance. Better protection of property rights increases external financing of small firms significantly more than it does for large firms, particularly due to the differential impact it has on bank and supplier finance (Beck,DemirgucKunt and Maksimovic, 2004).Combining firmlevel data with indicators of national policies and institutions also helps researchers assess the causes for the missing middle phenomenon observed in many developing countries. For example, Sleuwaegen and Goedhuys (2002) show that smaller firms grow relatively faster in Germany than in C244。te d’Ivoire, while the opposite holds for large firms. What drives these differences in the growth rates of small and large firms in developed and developing countries?Two papers using different methodologies, aggregation levels and datasets show the extent to which financial and institutional underdevelopment help explain the phenomenon of the missing middle for broad crosscountry samples. Using the WBES, Beck, DemirgucKunt and Maksimovic (2005) show that the effect of growth obstacles on firm growth is smaller in countries with betterdeveloped financial and legal systems. And even more, it is the small firms that stand to gain most from financial and institutional development. The effect of financial and legal development on the constraintsgrowth relationship is significantly stronger for small firms than for large firms. Financial and institutional development thus helps close the gap between small and large firms. Using crossindustry, crosscountry data for 44 countries and 36 industries in the manufacturing sector, Beck, DemirgucKunt, Laeven and Levine (2004) show that financial development exerts a disproportionately large positive effect on the growth of industries that are technologically more dependent on small firms. Their results suggest that the furniture industry (an industry with many small firms) should grow % per annum faster than the spinning industry (an industry with relatively few small firms) in Canada (a country with a well developed financial system) than in India (which has a low level of financial development). Since the average industry growth rate in their sample is %, this is a relatively large , small firms not only suffer more from market frictions such as transaction costs and information asymmetries than large firms – as discussed above – but these market frictions have a disproportionately larger effect on small firms in countries with less developed institutions.The constraining effect of financial and institutional