On the determinants of credit rationing: Firm-level evidence from transition countries

Konstantinos Drakos () and Nicholas A. Giannakopoulos ()

Journal of International Money and Finance, 2011, vol. 30, issue 8, pages 1773-1790

Abstract: Using survey data for firms from Eastern European transition economies we investigate the determinants of credit rationing. Our rationing definition incorporates firms whose loan application was rejected, but also ‘discouraged’ potential borrowers. We employ a bivariate probit with censoring, approach that accounts for the underlying selectivity since rationed firms are a subset of those without a loan. We include firm-specific attributes related to the alleviation of informational asymmetries, and therefore expected to affect credit rationing. We find that credit rationing depends on firm size, profitability, sales growth, ownership type, legal status, sectoral heterogeneity and the country-specific level of domestic credit.

Keywords: Bivariate probit; Censoring; Credit rationing; Transition (search for similar items in EconPapers)
JEL-codes: C24 E22 G31 P20 (search for similar items in EconPapers)
Date: 2011
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Persistent link: http://EconPapers.repec.org/RePEc:eee:jimfin:v:30:y:2011:i:8:p:1773-1790

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