Who Benefits from Credit Subsidies?
AbstractWe investigate the impact of interest rate subsidies on the total amount of borrowing and on the average cost of borrowing using data on a panel of bank-firm relationships in Italy. Our analysis reveals that subsidies are likely to reach borrowers that would have received finance even without a subsidy, and that they have no significant real effect on lending. The bank administering the program benefits at least partially of the rents they generate and its appropriation is found to be larger the larger its market power and its informational advantage to competitors.
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Bibliographic InfoArticle provided by SIPI Spa in its journal Rivista di Politica Economica.
Volume (Year): 97 (2007)
Issue (Month): 5 (September-October)
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Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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