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SME Access to Credit in Guatemala and Nicaragua: Challenging Conventional Wisdom with New Evidence

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Ricardo Bebczuk (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata)
Abstract

This paper develops a conceptual framework and offers new statistical evidence on the access to credit by micro, small, and medium enterprises (MSMEs) in Guatemala and Nicaragua. To this end, and after reviewing the existing literature on the topic, it produces new empirical evidence drawn from the official Household Survey and the World Bank’s Investment Climate Survey, conducted in both countries in 2006. The core contribution of the paper lies in the critical revision of three pieces of common knowledge, namely: (1) A large fraction of MSMEs has an excess demand for credit; (2) In the presence of credit market failures, governments must and actually do assist MSMEs in gaining access to loan facilities; and (3) Alternative credit instruments, such as leasing, factoring, microcredit, and third-party guarantee schemes, can be a suitable and massive solution for the lack of financing. Our analysis refutes to a large extent these assertions and advances some basic policy prescriptions that should help improve the resource allocation and impact of specific MSME financial programs.

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Paper provided by CEDLAS, Universidad Nacional de La Plata in its series Working Papers with number 0080.

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Length: 56 pages
Date of creation: Jan 2009
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Handle: RePEc:dls:wpaper:0080

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  2. Javier Alejo, 2006. "Desigualdad Salarial en el Gran Buenos Aires: Una Aplicación de Regresión por Cuantiles en Microdescomposiciones," Working Papers 0036, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  3. Adriana Conconi & Andres Ham, 2007. "Pobreza Multidimensional Relativa. Una Aplicación a la Argentina," Working Papers 0057, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  4. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Mariana Marchionni & Walter Sosa-Escudero & Javier Alejo, 2008. "La Incidencia Distributiva del Acceso, Gasto y Consumo de los Servicios Públicos," Working Papers 0067, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  6. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June. [Downloadable!] (restricted)
  7. Sebastian Galiani & Daniel Heymann & Carlos Dabus & Fernando Tohme, 2007. "Land-Rich Economies, Education and Economic Development," Working Papers 0049, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
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  8. Mariana Marchionni & Germán Bet & Ana Pacheco, 2007. "Empleo, Educación y Entorno Social de los Jóvenes: Una Nueva Fuente de Información," Working Papers 0061, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  9. Leonardo Gasparini & Javier Alejo & Francisco Haimovich & Sergio Olivieri & Leopoldo Tornarolli, 2007. "Poverty among the Elderly in Latin America and the Caribbean," Working Papers 0055, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  10. Mariana Marchionni & Walter Sosa-Escudero & Javier Alejo, 2008. "Efectos Distributivos de Esquemas Alternativos de Tarifas Sociales: Una Exploración Cuantitativa," Working Papers 0069, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  11. Sebastian Galiani & Federico Weinschelbaum, 2007. "Modeling Informality Formally: Households and Firms," Working Papers 0047, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  12. Leopoldo Tornarolli & Adriana Conconi, 2007. "Informalidad y Movilidad Laboral: Un Análisis Empírico para Argentina," Working Papers 0059, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  13. Adriana Conconi & Guillermo Cruces & Sergio Olivieri & Raúl Sánchez, 2007. "E pur si muove? Movilidad, Pobreza y Desigualdad en América Latina," Working Papers 0062, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
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  14. Leonardo Gasparini & Santiago Pinto, 2005. "Equality of Opportunity and Optimal Cash and In-Kind Policies," Working Papers 0022, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
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  15. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier. [Downloadable!] (restricted)
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  16. Rafael Di Tella & Sebastian Galiani & Ernesto Schargrodsky, 2006. "Crime Distribution and Victim Behavior during a Crime Wave," Working Papers 0044, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  17. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1988-1), pages 141-206. [Downloadable!]
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