SME Credit Availability Around the World: Evidence from the World Bank's Enterprise Surveys

43 Pages Posted: 22 Apr 2012 Last revised: 6 Dec 2019

See all articles by Rebel A. Cole

Rebel A. Cole

Florida Atlantic University

Andreas Dietrich

Lucerne University of Applied Sciences and Arts

Tracie Frost

Florida Atlantic University

Date Written: December 04, 2019

Abstract

We use data from the World Bank’s Enterprise Surveys to test the importance of governance to the availability of credit. We model the credit-allocation process for SMEs in three steps. Based upon these steps, we classify small businesses into four groups based upon their credit needs – firms that do not need credit (No-Need), firms that need credit but fail to apply (Discouraged), firms that apply for credit and either are turned down (Denied) or extended credit (Approved). We find that firms in countries with better governance are less likely to report needing credit, being discouraged from applying for credit, or being denied credit.

Keywords: availability of credit, denied credit, discrimination, discouraged firm, entrepreneurship, small business, WBES

JEL Classification: G21, G32, J71, L11, M13

Suggested Citation

Cole, Rebel A. and Dietrich, Andreas and Frost, Tracie, SME Credit Availability Around the World: Evidence from the World Bank's Enterprise Surveys (December 04, 2019). Midwest Finance Association 2013 Annual Meeting Paper, Available at SSRN: https://ssrn.com/abstract=2043624 or http://dx.doi.org/10.2139/ssrn.2043624

Rebel A. Cole (Contact Author)

Florida Atlantic University ( email )

College of Business
777 Glades Road
Boca Raton, FL 33431
United States
1-561-297-4969 (Phone)

HOME PAGE: http://rebelcole.com

Andreas Dietrich

Lucerne University of Applied Sciences and Arts ( email )

IFZ Institute of Financial Services Zug
P.O. Box 4332
Zug, CH-6304
Switzerland

Tracie Frost

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

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