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On the determinants of credit rationing: Firm-level evidence from transition countries

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  • Drakos, Konstantinos
  • Giannakopoulos, Nicholas

Abstract

Using survey data for firms from Eastern European transition economies we investigate the determinants of credit rationing. Our rationing definition incorporates firms whose loan application was rejected, but also ‘discouraged’ potential borrowers. We employ a bivariate probit with censoring, approach that accounts for the underlying selectivity since rationed firms are a subset of those without a loan. We include firm-specific attributes related to the alleviation of informational asymmetries, and therefore expected to affect credit rationing. We find that credit rationing depends on firm size, profitability, sales growth, ownership type, legal status, sectoral heterogeneity and the country-specific level of domestic credit.

Suggested Citation

  • Drakos, Konstantinos & Giannakopoulos, Nicholas, 2011. "On the determinants of credit rationing: Firm-level evidence from transition countries," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1773-1790.
  • Handle: RePEc:eee:jimfin:v:30:y:2011:i:8:p:1773-1790
    DOI: 10.1016/j.jimonfin.2011.09.004
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    Cited by:

    1. Anabela Marques Santos & Michele Cincera, 2017. "Access to finance as a pressing problem: Evidence from innovative European firms," iCite Working Papers WP2017-022, ULB -- Universite Libre de Bruxelles.
    2. Fauceglia, Dario, 2015. "Credit constraints, firm exports and financial development: Evidence from developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 55(C), pages 53-66.
    3. repec:spr:rvmgts:v:11:y:2017:i:3:d:10.1007_s11846-016-0194-z is not listed on IDEAS
    4. Aristei, David & Gallo, Manuela, 2016. "Does gender matter for firms' access to credit? Evidence from international data," Finance Research Letters, Elsevier, vol. 18(C), pages 67-75.
    5. Nguyen, Thi Nhung & Gan, Christopher & Hu, Baiding, 2015. "An empirical analysis of credit accessibility of small and medium sized enterprises in Vietnam," MPRA Paper 81911, University Library of Munich, Germany, revised 2015.

    More about this item

    Keywords

    Bivariate probit; Censoring; Credit rationing; Transition;

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General

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