Individualism Reduces Borrower Discouragement

33 Pages Posted: 27 Sep 2022

See all articles by Francis Osei-Tutu

Francis Osei-Tutu

Université de Strasbourg

Laurent Weill

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie)

Abstract

Borrower discouragement contributes to reduce access to credit worldwide. In this paper, we test the hypothesis that individualism influences discouragement of borrowers. We use data on borrower discouragement and individualism at the firm level for a large dataset of 32,000 firms from 59 countries. We find that firms in individualistic countries are less likely to be discouraged from applying for loans. We further find that individualistic norms reduce borrower discouragement through its impact on lower corruption in lending and weak informal support networks. Our results hold after controlling for other cultural dimensions, addressing potential endogeneity and sample selection issues. Thus, our findings provide evidence that individualism reduces borrower discouragement, thereby improving access to credit of firms.

Keywords: individualism, collectivism, borrower discouragement, access to credit

Suggested Citation

Osei-Tutu, Francis and Weill, Laurent, Individualism Reduces Borrower Discouragement. Available at SSRN: https://ssrn.com/abstract=4231196 or http://dx.doi.org/10.2139/ssrn.4231196

Francis Osei-Tutu

Université de Strasbourg ( email )

47 avenue de la Forêt Noire
67082 Strasbourg Cedex
Strasbourg
France

Laurent Weill (Contact Author)

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie) ( email )

61 Avenue de la Forêt Noire
F-67085 Strasbourg Cedex
France

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