Access to Credit and Firm Ownership in South Africa

29 Pages Posted: 10 Dec 2006

See all articles by George R. G. Clarke

George R. G. Clarke

Texas A&M International University - A.R. Sanchez Jr., School of Business

Robert Cull

World Bank - Development Research Group (DECRG)

Date Written: July 2006

Abstract

Although South Africa' financial sector is well-developed, microenterprise managers see access to finance as a serious problem. Managers of black-owned microenterprises are more likely to see it as a problem - and are less likely to use bank financing - than white-owned microenterprises. Differences in access remain statistically significant and large even after controlling for observable enterprise characteristics. Adding additional variables to control for enterprise productivity, registration, and the presence of audited accounts reduces the size and statistical significance of the difference, but does not eliminate it. This suggests that either other unobserved differences (such as, the availability of collateral) or factors such as discrimination explain part of the difference in access to credit.

Keywords: South Africa, Informal Sector, Access to Finance

JEL Classification: G21, O55

Suggested Citation

Clarke, George and Cull, Robert, Access to Credit and Firm Ownership in South Africa (July 2006). Available at SSRN: https://ssrn.com/abstract=950516 or http://dx.doi.org/10.2139/ssrn.950516

George Clarke (Contact Author)

Texas A&M International University - A.R. Sanchez Jr., School of Business ( email )

5201 University Blvd.
Laredo, TX 78041-1900
United States

Robert Cull

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-6365 (Phone)
202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/rcull

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