Tag
credit_constraints
12 findings
Finance & microfinanceMicroenterprise Capital Grant Induced Debt DisplacementIn the immediate months following the capital drop (Round 6), capital grant recipients significantly reduced loan take-up by 135.6 cedis (p < 0.05) relative to control firms, using cash grants to displace credit borrowing while increasing short-term Susu savings by 28.38 cedis per month in the combined group (p < 0.01).RCTDevelopmentCredit Constraint Budget RelaxationEven among poor households with spending near baseline levels, 88 percent spent more than the grant amount (Rs 125/year), allowing anticipated grants to relax general budget constraints and result in a 76% private expenditure offset (elasticity of -0.21, p < 0.01).RCTEconomics (general)Credit Frictions and Entrepreneurial Talent MisallocationFinancial constraints block low-capital individuals with superior managerial talent from starting new enterprises, suppressing industry productivity growth by choking off competitive reallocation.Observational StudyFinance & microfinanceDifferential Binding Constraints Across Financial Product MarketsTake-up for offered savings accounts was only ~1 percentage point (9 total individuals) and microloans near zero (2 individuals), whereas micro-insurance take-up surged by 25.1 to 28.0 percentage points (p < 0.01).RCTFinance & microfinanceFinancial Barriers to Talented Entrepreneurial EntryFinancing obstacles prevent talented entrepreneurs with low capital from establishing competing enterprises, which, combined with delegation limits on large firms, severely restricts market reallocation from inefficient to efficient managers.Observational StudyFinance & microfinanceSize-Dependent Credit Constraints and High Marginal Returns to Capital$100-$200 cash grants to Sri Lankan microenterprises yielded a 5 percent monthly real return on capital; directed credit expansion to Indian medium-sized firms generated an annual return on loans close to 90 percent.RCTFinance & microfinanceMicroenterprise High Marginal Returns to CapitalGrants of $100–$200 to Sri Lankan microenterprises increased capital stock and generated an implied real return to capital of 5 percent per month (60 percent annually); directed lending to Indian medium-sized firms yielded an annual return on capital close to 90 percent.RCTFinance & microfinanceInformal Credit Market ExclusionAt baseline, 82.5% of the 160 microentrepreneurs had never accessed formal credit markets. Over the entire two-year study period, all 160 tailors combined took a total of only 13 informal loans from non-bank sources, demonstrating near-zero reliance on informal debt markets.Observational StudyFinance & microfinanceIntangible Management Capital Financing AsymmetryWhile large manufacturing firms routinely secure physical equipment financing exceeding $1,000,000, zero firms obtain commercial loans to hire management consultants due to lack of collateralizable physical assets and bank skepticism.Observational StudyDevelopmentUnconditional Capital Grant Returns in MicroenterprisesGrant recipients invested an average of 179 cedis more than control firms in baseline-targeted categories within two months (p < 0.10). However, capital grants caused a statistically significant post-treatment drop in monthly business income of 45 cedis (p < 0.05) against a control mean of 146 cedis, with 95% confidence intervals ranging from -66% to -1%.RCTFinance & microfinanceMicrofinance Credit Inelasticity in Transnational HouseholdsOnly 2 out of 438 offered individuals took up the microloan product (~0.46% take-up rate), yielding regression coefficients statistically indistinguishable from zero.RCTDevelopmentRisk Rationing in Agricultural Credit MarketsRisk credit constraint significantly decreases the probability of purchasing inorganic fertilizer (coefficient = -0.275, p < 0.01). Quantity credit constraint also significantly reduces fertilizer purchase probability (coefficient = -0.251, p < 0.01).Observational Study