Wells, and seminar participants at Harvard University and the University of California at San Diego for many helpful comments on earlier versions of this paper; two anonymous referees provided thoughtful insights and suggestions. I am also very grateful to the many members of the Indonesian business community who were kind enough to meet with me during my visits to Jakarta. Any remaining errors are my own.

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Recent work suggests that financial development is important for economic growth, since financial markets more effectively allocate capital to firms with high value projects. For firms in poorly developed financial markets, implicit borrowing in the form of trade credit may provide an alternative source of funds. We show that industries with higher dependence on trade credit financing exhibit higher rates of growth in countries with weaker financial institutions. Furthermore, consistent with barriers to trade credit access among young firms, we show that most of the effect that we report comes from growth in the size of preexisting firms.