Firms in developing countries, particularly MSMEs, often face growth constraints due to limited access to credit. This paper examines the relationship between credit access and firm-level employment using data from 21,696 MSMEs across 30 Latin American and Caribbean countries, drawn from the World Bank Enterprise Surveys. 

Consistent with prior evidence, we find that an additional US$1 million in credit is associated with the creation of roughly 4 permanent jobs per year. 

We document five additional results: (i) smaller firms exhibit higher employment growth in relative terms due to credit, but lower growth in absolute (nominal) terms; (ii) the effect is stronger among faster-growing firms; (iii) credit used for fixed-asset investment is associated with larger employment gains than credit used for working capital; (iv) more recent loans exhibit larger effects, which dissipate as loans age; and (v) low levels of banking sector competition weaken the impact of credit on employment.