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Heterogeneity and state dependence in firms’ access to bank credit

David Aristei () and Gabriele Angori ()
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David Aristei: University of Perugia
Gabriele Angori: University of Ferrara

Small Business Economics, 2022, vol. 59, issue 1, No 4, 47-78

Abstract: Abstract This paper investigates firms’ access to bank credit in eleven euro area countries over the periods 2014–2019. Exploiting firm-level longitudinal data, we analyse loan demand and credit rationing probabilities, accounting for sample selection, unobserved heterogeneity and state dependence. Empirical results show that small and informationally opaque businesses, with deteriorated public support and credit history, face greater difficulties in obtaining bank loans. Furthermore, we provide evidence of a significant degree of state dependence in access to credit. In particular, firms that have already experienced credit restrictions are more likely to face further constraints, while enterprises that applied for bank financing in the past seem to have easier access to credit. Focusing on the subset of firms actually needing additional bank financing, we also find that past credit restrictions significantly reduce their current demand, providing evidence of a significant discouragement effect.

Keywords: Access to credit; Financing constraints; Bank lending; State dependence; SMEs (search for similar items in EconPapers)
JEL-codes: C33 D25 G21 G32 O16 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11187-021-00545-x

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