Credit scarcity in developing countries: an empirical investigation using Brazilian firm-level data

Available from: 
October 2013
Paper author(s): 
Antonio Marcos Hoelz Pinto Ambrozio (BNDES and PUC-RIO)
André Albuquerque de Sant’Anna (BNDES)
Filipe Lage de Sousa (BNDES)
João Paulo Martin Faleiros (BNDES)
Topic: 
Financial Economics
Microeconomics - Competition - Productivity
Year: 
2013


Credit constraint is one market failure existent in many developing countries, as evidenced by Banerjee and Duflo (2005). Its relevance to innovation and growth is crucial, since it hampers entrepreneur efforts for making investments. Terra (2003) and Aldrighi and Bisinha (2010) provided evidence that Brazilian firms are indeed credit constrained using microdata, yet some differences between them emerge. While Terra (2003) outcomes suggest that credit constraints are softer for large firms, Aldrighi and Bisinha (2010) found the opposite. We shed some light to this debate exploiting a rich database that contains both listed and non listed firms in the stock market. Instead, both cited papers focused on firms in the former group. Since non listed firms comprehend the major part of Brazilian firms, our results are grounded in a more representative sample. Also, we exploit the availability of non-traded firms to investigate whether this type of firms are more credit restricted than those listed in the stock market. Finally, we discuss if exporting firms are less credit constrained. Our results show that all dimensions considered, greater size, listed in the stock market, and export capacity, are associated with less credit restriction. Besides, the influence of the last two is beyond any possible correlation with size: even small firms are not restricted either listed in the stock market or with high export revenue.

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Research section: 
Lacea 2013 annual meeting
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