**<u>Table 2. Baseline regressions of productivity (log) with interactive terms</u>**

||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|
|---|---|---|---|---|---|---|---|---|
|Corruption (log)|0.103|0.145|0.092|0.100|0.120|1.378***|-3.461*|-1.757|
||(0.240)|(0.237)|(0.238)|(0.238)|(0.238)|(0.441)|(1.934)|(2.091)|
|Regulation (log)|1.051***|0.795**|0.689**|0.702**|0.690**|0.511|6.641|6.963*|
||(0.340)|(0.344)|(0.340)|(0.340)|(0.340)|(0.802)|(4.072)|(4.094)|
|Corruption*Regulation (log)|-4.822**|-5.640***|-4.966**|-5.109**|-5.293**|-6.747***|-5.398**|-6.736***|
||(2.178)|(2.172)|(2.155)|(2.154)|(2.149)|(2.222)|(2.255)|(2.295)|
|Firm size (log)||0.110***|0.064***|0.063***|0.028|0.029|0.037|0.034|
|||(0.017)|(0.017)|(0.017)|(0.018)|(0.018)|(0.029)|(0.029)|
|Firm age||0.120***|0.117***|0.100***|0.097***|0.095***|0.142***|0.143***|
|||(0.025)|(0.024)|(0.027)|(0.027)|(0.027)|(0.041)|(0.041)|
|Exports (D)||0.251***|0.226***|0.226***|0.184***|0.184***|0.248***|0.252***|
|||(0.058)|(0.057)|(0.057)|(0.058)|(0.058)|(0.093)|(0.093)|
|Foreign ownership (share)||0.530***|0.534***|0.534***|0.503***|0.505***|0.538***|0.525***|
|||(0.071)|(0.071)|(0.071)|(0.071)|(0.071)|(0.130)|(0.129)|
|Overdraft (dummy)|||0.383***|0.382***|0.365***|0.364***|0.133**|0.139**|
||||(0.042)|(0.042)|(0.042)|(0.042)|(0.061)|(0.061)|
|Fully constrained (D)|||-0.349***|-0.351***|-0.339***|-0.338***|-0.186**|-0.186**|
||||(0.055)|(0.055)|(0.055)|(0.055)|(0.081)|(0.080)|
|Partially constrained (D)|||-0.185***|-0.186***|-0.173***|-0.172***|-0.119*|-0.121*|
||||(0.044)|(0.044)|(0.043)|(0.043)|(0.068)|(0.068)|
|Training (D)|||||0.205***|0.204***|0.222***|0.218***|
||||||(0.041)|(0.041)|(0.068)|(0.068)|
|Certification (D)|||||0.248***|0.251***|0.308***|0.311***|
||||||(0.058)|(0.058)|(0.091)|(0.091)|
|Corruption-squared||||||-2.502***||-2.217***|
|||||||(0.744)||(0.826)|
|Regulation-squared||||||0.676||0.336|
|||||||(2.271)||(2.275)|
|Fixed effects<sup>a</sup>|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|Interactive terms<sup>b</sup>|No|No|No|No|No|No|Yes|Yes|
|Number of observations|39,732|39,732|39,732|39,732|39,732|39,732|39,732|39,732|
|Number of countries|111|111|111|111|111|111|111|111|
|R2|0.308|0.327|0.344|0.344|0.349|0.350|0.356|0.357|
|**_Estimated coe_**<br>_25th_|<br>**_fficient val_**<br>009|<br>**_ue of corru_**<br>008|<br>**_ption at 25_**<sup>**_th_**</sup><br>0106|<br>**_, 50_**<sup>**_th_**</sup>**_and_**<br>0103|<br>**_75th percen_**<br>0092|<br>**_tile value of_**<br>05079|<br>**_regulation_**<br>0043|<br> <br>04475|
||-.<br>0.188|-.<br>(0.186)|-.<br>(0.186)|-.<br>(0.187)|-.<br>(0.187)|.<br>(0.253)|-.<br>(0.196)|.<br>(0.262)|
|_50th_|-0.331**|-0.362**|-0.354**|-0.359**|-0.356**|0.1205|-0.138|0.2442|
||0.170|(0.170)|(0.169)|(0.169)|(0.169)|(0.216)|(0.163)|(0.215)|
|_75th_|-0.862***|<br>-0.982***|<br>-0.901***|<br>-0.921***|<br>-0.938***|<br>-0.521|<br>-0.939**|<br>-0.626|
||0.314|(0.315)|(0.310)|(0.309)|(0.310)|(0.333)|(0.425)|(0.445)|

Note: Standard errors in brackets. Significance is denoted by *** (1%), ** (5%), * (10%). a: Fixed effects included are: country, industry, sector, region and year; b: Both regulation and corruption are interacted with all explanatory variables in the analysis. Following variables are also included in the regression but are not reported in the table: GDP per capita, manager’s experience, manager’s gender, whether firms reported courts being fair; whether firms experienced crime.

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