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The international evidence on discouraged small businesses

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  • Chakravarty, Sugato
  • Xiang, Meifang

Abstract

We use a unique firm-level survey database compiled by the World Bank to examine the drivers of discouraged small businesses in various developing economies around the world. We confirm that older and larger firms are less likely to be discouraged and that the level of competition and the relationships of the firms with banks have a significant impact on the probability of a firm in being discouraged. Further analysis suggests that the drivers of borrower discouragement might work differently for firms operating in relatively developed versus underdeveloped economies.

Suggested Citation

  • Chakravarty, Sugato & Xiang, Meifang, 2013. "The international evidence on discouraged small businesses," Journal of Empirical Finance, Elsevier, vol. 20(C), pages 63-82.
  • Handle: RePEc:eee:empfin:v:20:y:2013:i:c:p:63-82
    DOI: 10.1016/j.jempfin.2012.09.001
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    Cited by:

    1. Betz, Frank & Ravasan, Farshad R., 2016. "Collateral regimes and missing job creation in the MENA region," EIB Working Papers 2016/03, European Investment Bank (EIB).
    2. Leon, Florian, 2015. "Does bank competition alleviate credit constraints in developing countries?," Journal of Banking & Finance, Elsevier, vol. 57(C), pages 130-142.
    3. Marc Cowling & Weixi Liu & Maria Minniti & Ning Zhang, 2016. "UK credit and discouragement during the GFC," Small Business Economics, Springer, vol. 47(4), pages 1049-1074, December.
    4. repec:wsi:ijfexx:v:04:y:2017:i:02n03:n:s242478631750027x is not listed on IDEAS
    5. repec:wly:jmoncb:v:48:y:2016:i:8:p:1691-1724 is not listed on IDEAS
    6. repec:spr:rvmgts:v:11:y:2017:i:3:d:10.1007_s11846-016-0194-z is not listed on IDEAS
    7. repec:eee:ememar:v:33:y:2017:i:c:p:19-41 is not listed on IDEAS
    8. Mac an Bhaird, Ciarán & Vidal, Javier Sanchez & Lucey, Brian, 2016. "Discouraged borrowers: Evidence for Eurozone SMEs," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 46-55.
    9. repec:mje:mjejnl:v:14:y:2018:i:1:p:143-158 is not listed on IDEAS
    10. Steven Ongena & Alexander Popov, 2016. "Gender Bias and Credit Access," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(8), pages 1691-1724, December.
    11. repec:enr:rpaper:0018 is not listed on IDEAS
    12. repec:eee:asieco:v:52:y:2017:i:c:p:45-55 is not listed on IDEAS

    More about this item

    Keywords

    Discouraged borrowers; Banking; Emerging markets; Credit rationing; Relationships; Adverse selection;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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