Education and Credit

Yota Deli, Manthos D. Delis and Adele Whelan

No 202517, Working Papers from School of Economics, University College Dublin

Abstract: We analyze how entrepreneurs’ education affects the relationship between access to bank credit and real outcomes. For identification, we use a sharp discontinuity created by a bank’s credit score and the associated loan origination decision, along with exogenous variations in educational attainment. Our findings show that loans granted to university-educated entrepreneurs result in higher ex-post income, wealth, firm growth, and performance. Innovation, asset intangibility, and the hiring of higher-paid employees almost fully account for these gains. These mechanisms accentuate technological differences across firms, leading to higher payoffs but also higher across-firm inequality over the medium to long run.

Keywords: Education; Entrepreneurs; Bank credit; Firm performance; Pay inequality (search for similar items in EconPapers)
JEL-codes: G21 G32 I24 M54 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2025-06
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