What Discourages Small Businesses from Asking for Loans? The International Evidence on Borrower Discouragement
We use a unique firm-level survey database compiled by the World Bank to examine the drivers of discouraged small businesses in various developing economies around the world. We confirm that older and larger firms are less likely to be discouraged and that the level of competition and the relationships of the firms with banks have a significant impact on the probability of a firm in being discouraged. Further analysis suggests that drivers of discouragement work differently for firms operating in relatively developed and underdeveloped economies. We also provide evidence that firm discouragement, as an efficient self-screening mechanism, is not as efficient in underdeveloped economies as it is in the United States.
Year of publication: |
2009-05
|
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Authors: | Chakravarty, Sugato ; Xiang, Meifang |
Institutions: | Department of Consumer Sciences and Retailing, Purdue University |
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