Can microcredit impact the activity of small and medium enterprises? New evidence from a Regression Discontinuity Design in Panama

Nene Oumou Diallo () and Jonathan Goyette
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Nene Oumou Diallo: Département d'économique, Université de Sherbrooke

Cahiers de recherche from Departement d'économique de l'École de gestion à l'Université de Sherbrooke

Abstract: In this paper, we conduct an impact analysis of microcredit on entrepreneurial activity using a new data-set collected among 740 entrepreneurs located in Panama. Our focus is on a new type of microfinance institution which grants loans to enterprises falling in what we call the financial missing middle Our results show a limited impact of access to credit on firm's revenues despite a significant impact on investment in equipment and immobilization. The magnitude of the positive effect is higher on micro-enterprises while auto-enterprises are negatively impacted by microcredit as is usually documented in the literature. We emphasize that the cost of credit is one of the major determinants of the limited impact of microcredit on entrepreneurial activity.

Keywords: Microfinance Institutions; firm’s performance; Regression Discontinuity; Panama (search for similar items in EconPapers)
JEL-codes: D22 G21 L26 O12 O16 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2016-08
New Economics Papers: this item is included in nep-ban, nep-dev, nep-ent, nep-mfd, nep-sbm and nep-sog
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Persistent link: https://EconPapers.repec.org/RePEc:shr:wpaper:16-05

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