An Analysis of Discouraged Small Businesses: An International Perspective

45 Pages Posted: 18 Mar 2008

See all articles by Sugato Chakravarty

Sugato Chakravarty

Purdue University

Meifang Xiang

Purdue University - Department of Consumer Sciences & Retailing

Date Written: March, 14 2008

Abstract

We use a unique firm-level survey database compiled by the World Bank in order to examine the drivers of discouraged small businesses in various economics around the world. We find that level of competition and the relationships with banks and other financial institutions have significant impact on the probability of a firm to be discouraged. We also find that there are significant differences among discouraged firms in relatively developed economies and those in relatively underdeveloped economies. An increase in firm size and having relationships with a greater number of banks appear to decrease the likelihood of being discouraged among firms in underdeveloped economies. Having a greater number of competitors increases the probability of being discouraged among firms in underdeveloped economies. Finally, higher growth rate countries have a lower proportion of discouraged borrowers overall.

Keywords: discouraged borrowers, relationships, international, world bank, competition, firm size, underdeveloped, emerging

JEL Classification: F30, F34

Suggested Citation

Chakravarty, Sugato and Xiang, Meifang, An Analysis of Discouraged Small Businesses: An International Perspective (March, 14 2008). Available at SSRN: https://ssrn.com/abstract=1106181 or http://dx.doi.org/10.2139/ssrn.1106181

Sugato Chakravarty (Contact Author)

Purdue University ( email )

Consumer Sciences
1262 Matthews Hall Rm 214F
West Lafayette, IN 47906
United States
765-494-6427 (Phone)
765-494-0869 (Fax)

HOME PAGE: http://web.ics.purdue.edu/~sugato

Meifang Xiang

Purdue University - Department of Consumer Sciences & Retailing ( email )

812 W. State St
West Lafayette, IN 47907
United States

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