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Financial Access of Latin America and Caribbean Firms: What Are the Roles of Institutional, Financial, and Economic Development?

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  • Lan Khanh Chu

Abstract

This article examines the impact of institutional, financial, and economic development on firms’ access to finance in Latin America and Caribbean region. Based on firm- and country-level data from the World Bank databases, we employ an ordered logit model to understand the direct and moderating role of institutional, financial, and economic development in determining firms’ financial obstacles. The results show that older, larger, facing less competition and regulation burden, foreign owned, and affiliated firms report lower obstacles to finance. Second, better macro-fundamentals help to lessen the level of obstacles substantially. Third, the role of institutions in promoting firms’ inclusive finance is quite different to the role of financial development and economic growth. JEL Classification: E02; G10; O16; P48

Suggested Citation

  • Lan Khanh Chu, 2021. "Financial Access of Latin America and Caribbean Firms: What Are the Roles of Institutional, Financial, and Economic Development?," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 20(2), pages 227-263, December.
    • Handle: RePEc:sae:emffin:v:20:y:2021:i:2:p:227-263
    DOI: 10.1177/09726527211015317
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    More about this item

    Keywords

    Financial constraints; institutional quality; financial development; economic development;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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