What Predicts the Growth of Small Firms? Evidence from Tanzanian Commercial Loan Data

Ellis Mia (), Cynthia Kinnan, Margaret McMillan and Shaukat Sarah ()
Additional contact information
Ellis Mia: International Food Policy Research Institute, Washington D.C., USA
Shaukat Sarah: Department of Economics, Tufts University, Medford, USA

Journal of Globalization and Development, 2023, vol. 14, issue 2, 253-320

Abstract: Not all firms have equal capacity to absorb productive credit. Identifying those with higher potential may have large consequences for productivity. We collect detailed survey data on small- and medium-sized Tanzanian firms who borrow from a large commercial bank, which in turn raises funds via international capital markets. Using machine learning methods to identify predictors of loan growth, we document, first, that we achieve high rates of predictive power. Second, “soft” information (entrepreneurs’ motivations for entrepreneurship and constraints faced) has predictive power over and above administrative data (sector, age, etc.). Third, there is a different and larger set of predictors for women than men, consistent with greater barriers to efficient capital allocation among female entrepreneurs.

Keywords: credit; entrepreneurship; machine learning; misallocation; Tanzania (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1515/jgd-2023-0005 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: What Predicts the Growth of Small Firms? Evidence from Tanzanian Commercial Loan Data (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:globdv:v:14:y:2023:i:2:p:253-320:n:8

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/jgd/html

DOI: 10.1515/jgd-2023-0005

Access Statistics for this article

Journal of Globalization and Development is currently edited by Joseph E. Stiglitz, Kevin Gallagher, Jeronim Capaldo, Arjun Jayadev, José Antonio Ocampo and Dani Rodrik

More articles in Journal of Globalization and Development from De Gruyter
Bibliographic data for series maintained by Peter Golla ().