Enterprise Size, Financing Patterns and Credit Constraints in Brazil: Analysis of Data from the Investment Climate Assessment Survey

World Bank Working Paper No. 49

72 Pages Posted: 2 Feb 2007

See all articles by Anjali Kumar

Anjali Kumar

World Bank

Manuela Francisco

University of Nottingham - School of Economics

Abstract

This paper investigates the importance of firm size with respect to access to credit relative to firm performance, and other factors which may affect creditworthiness such as management education, location, or the industrial sector to which the firm belongs. The principal findings are that size strongly affects access to credit, compared to performance as well as other variables, suggesting quantitative limitations to credit access. Looking at short-versus long-term loans, the impact of size on access to credit is greater for longer-terms loans. Further, looking at the ownership of the lending institution, it is found that public financial institutions are more likely to lend to large firms. Finally, examining the role of financial constraints relative to other constraints faced by the firm it is found however that financial access constraints may have a less significant differential impact across firms of different sizes than other constraints though cost of finance as a constraint is very important.

The authors are grateful to Thorsten Beck, Gledson Carvalho, Soumya Chattopadhyay, Marianne Fay, Luke Haggarty, Patrick Honohan, Leora Klapper, Leonid Koryukin, John Nasir, Maria Soledad Martinez Peria, Mark Thomas, and José Guilherme Reis for their valuable comments on earlier versions.

Keywords: small enterprises, financing, SMEs, credit, size, ownership, credit constraints

JEL Classification: G15, G18, G21, G28 O16, O17, O32, O33, O38

Suggested Citation

Kumar, Anjali and Francisco, Manuela, Enterprise Size, Financing Patterns and Credit Constraints in Brazil: Analysis of Data from the Investment Climate Assessment Survey. World Bank Working Paper No. 49. Available at SSRN: https://ssrn.com/abstract=960152 or http://dx.doi.org/10.2139/ssrn.960152

Anjali Kumar (Contact Author)

World Bank ( email )

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Manuela Francisco

University of Nottingham - School of Economics ( email )

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United Kingdom
115 951 5870 (Phone)
115 951 4159 (Fax)

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