Inequalities in Firms’ Access to Credit in Latin America

Makler Harry (), Ness Walter L. () and Adrian Tschoegl ()
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Makler Harry: Stanford University, Stanford, CA, USA;University of Toronto, Toronto, ON, Canada
Ness Walter L.: Pontifical Catholic University of Rio de Janeiro, Rio de Janeiro – RJ, Brazil

Global Economy Journal, 2013, vol. 13, issue 3, 283-318

Abstract: A variety of social and economic institutions have contributed to the decline in poverty and inequality in Latin America. We focus on the bank-SME nexus because of the importance of banks as a source of finance for small and medium enterprises (SMEs), and the potential role that SMEs can play as sources of innovation, employment, and in reducing poverty and inequality. Our regression analysis of data from World Bank (WB) surveys of firms in Argentina, Brazil, Chile, and Mexico shows that firms that are smaller, newer, less technically advanced, and less well-located firms are more likely to report being credit constrained. The factors that did not count are executive characteristics such as gender, education, and experience in the sector, and firm performance or foreign ownership. Firms that worked with several banks, developed affiliations to business groups or were in trade and political associations were less likely to report credit constraint.

Keywords: financial markets; credit constraints; economic sociology; inequality; social networks; institutional embeddedness (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1515/gej-2013-0024

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