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Does firm size really affect the outcome of loan applications?

Girijasankar Mallik, Duc Nguyen Nguyen () and Anis Chowdhury

Economic Analysis and Policy, 2022, vol. 74, issue C, 806-820

Abstract: Based on cross-country survey data comprising more than 100,000 firm-year observations across 139 countries, we use a multinomial logit model to investigate the determinants of firms’ access to finance and why “needy” firms are discouraged from applying for bank loans. We find that the relationship between applying for a loan and firm size is non-linear. Further, we document evidence that growing firms need and apply for funds up to a certain threshold and are less likely to be discouraged.

Keywords: Access to finance; SMEs; Borrower discouragement; Heckman; Multinomial logit (search for similar items in EconPapers)
JEL-codes: D4 G21 G30 G32 L26 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.eap.2022.04.004

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