The Determinants of Firm Access to Credit in Latin America: Micro Characteristics and Market Structure

28 Pages Posted: 6 Oct 2016

See all articles by Andrea Filippo Presbitero

Andrea Filippo Presbitero

Università Politecnica delle Marche - Department of Economics; Centre for Macroeconomics & Finance Research (CeMaFiR)

Roberta Rabellotti

University of Pavia

Date Written: November 2016

Abstract

Due to deregulation and financial liberalization, Latin American countries have recently undertaken bank restructuring and consolidation processes. This paper investigates firm access to credit in the region, focusing on the role of the credit market structure. Through an empirical investigation based on the World Bank Enterprise Survey, we find that access to bank credit is very heterogeneous. On average, smaller and less productive firms are less likely to apply for credit and more likely to be financially constrained. Besides, a high degree of bank penetration and competition is significantly correlated with a lower probability that borrowers are financially constrained. Finally, foreign banks penetration has a negative effect on access to credit particularly in less developed and more concentrated markets, while it has a positive influence in more competitive and financially developed markets.

Suggested Citation

Presbitero, Andrea Filippo and Rabellotti, Roberta, The Determinants of Firm Access to Credit in Latin America: Micro Characteristics and Market Structure (November 2016). Economic Notes, Vol. 45, Issue 3, pp. 445-472, 2016. Available at SSRN: https://ssrn.com/abstract=2848590 or http://dx.doi.org/10.1111/ecno.12069

Andrea Filippo Presbitero (Contact Author)

Università Politecnica delle Marche - Department of Economics ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy
+39 0712207074 (Phone)

HOME PAGE: http://sites.google.com/site/presbitero/

Centre for Macroeconomics & Finance Research (CeMaFiR) ( email )

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Milan, 20100
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Roberta Rabellotti

University of Pavia ( email )

Corso Strada Nuova, 65
27100 Pavia, 27100
Italy

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