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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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    More about this item

    Keywords

    Discouraged borrowers; Banking; Emerging markets; Credit rationing; Relationships; Adverse selection;
    All these keywords.

    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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