Dispersion in Financing Costs and Development

Tiago Cavalcanti, Joseph Kaboski, Bruno S. Martins and Cezar Santos

No 28635, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Most aggregate theories of financial frictions model credit available at a single cost of financing but rationed. However, using a comprehensive firm-level credit registry, we document both high levels and high dispersion in credit spreads to Brazilian firms. We develop a quantitative dynamic general equilibrium model in which dispersion in spreads arises from intermediation costs and market power. Calibrating to the Brazilian data, we show that, for equivalent levels of external financing, dispersion has more profound impacts on aggregate development than single-price credit rationing and yields firm dynamics that are more consistent with observed patterns.

JEL-codes: E44 O11 O16 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-cwa, nep-dge, nep-fdg and nep-mac
Note: CF DEV EFG IFM
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Dispersion in Financing Costs and Development (2021)
Working Paper: Dispersion in Financing Costs and Development (2019)
Working Paper: Dispersion in Financing Costs and Development (2018)
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