The effect of size and productivity on borrowing discouragement for small firms in Colombia

Oscar Jaulín-Méndez

Latin American Journal of Central Banking (previously Monetaria), 2022, vol. 3, issue 4

Abstract: I estimate the effect micro firms’ size and productivity have on the probability of becoming a discouraged borrower: firms that do not use credit from the formal financial system despite needing it. I also estimate the effect that size and productivity have on the probability of becoming accepted in the event of a formal credit request. Using a trivariate probit model that corrects for selection biases, I find that productivity and size (number of employees) reduce the likelihood of becoming discouraged. Both variables are related to a higher probability of being accepted in formal credit requests.

Keywords: Discouraged borrowers; Trivariate probit; Micro firms (search for similar items in EconPapers)
JEL-codes: C31 G21 G30 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:lajcba:v:3:y:2022:i:4:s266614382200031x

DOI: 10.1016/j.latcb.2022.100077

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