Loan processing costs, information asymmetries and the speed of technology adoption

Salvatore Capasso and George Mavrotas

Economic Modelling, 2010, vol. 27, issue 1, 358-367

Abstract: This paper presents a simple model in which credit-constrained firms might delay the adoption of new and more productive technologies because of the external financing costs involved. Applying for a loan can be a very costly process by itself. Where there is a high degree of credit rationing, these costs might even deter entrepreneurs from applying for a loan altogether. We argue that the efficiency of the banking system, by affecting such costs, can influence the profitability of new technologies and entrepreneur's investment decisions, which, in turn, influence new technology implementation, capital accumulation and growth.

Keywords: Credit; market; Information; asymmetries; Loan; processing; costs; Financial; development; Economic; growth (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264-9993(09)00172-2
Full text for ScienceDirect subscribers only

Related works:
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:eee:ecmode:v:27:y:2010:i:1:p:358-367

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().