Indirect Effects of Access to Finance

Jing Cai and Adam Szeidl

American Economic Review, 2024, vol. 114, issue 8, 2308-51

Abstract: We created experimental variation across markets in China in the share of firms having access to a new loan product. Access to finance had a large positive direct effect on the performance of treated firms but a similar-sized negative indirect effect on that of firms with treated competitors, leading to nondetectable gains in producer surplus. Access to finance had a positive direct effect on business quality and consumer satisfaction and a negative effect on price, which were not offset by indirect effects, implying net gains in consumer surplus. We document other indirect effects and combine effects in a welfare evaluation.

JEL-codes: D22 G21 G32 L81 O16 P31 P34 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/aer.20220711

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