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Assessing Firms' Financing Constraints in Brazil

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dc.contributor.author Sakho, Yaye Seynabou
dc.contributor.author Claessens, Stijn
dc.date.accessioned 2014-02-03T21:36:30Z
dc.date.available 2014-02-03T21:36:30Z
dc.date.issued 2013-09
dc.identifier.uri http://hdl.handle.net/10986/16842
dc.description.abstract Firm surveys often indicate that firms complain a lot about lack of access to financial services, but financing constraints are difficult to identify, given demand and supply considerations and with only surveys based on firms' perceptions. Specifically, it is difficult to separate demand for access to finance of viable firms with good growth opportunities from that of firms that are not creditworthy and should not deserve financing. In Brazil, one of the main constraints to finance is related to the high level of interest rates, which affects both bank funding costs as well as bank intermediation spreads and, as such, the cost of finance and hence the demand and supply of bank financing. This paper analyzes a unique loan level data set that covers almost a decade of monthly firm bank information from credit registry information that is not publicly available as well as two cross-sections of Brazil's Investment Climate Assessment surveys in 2004 and 2008 that provide detailed information on firms' micro characteristics as well as perceptions of credit. The data allow identification of how firms' characteristics, banks' characteristics, and macro variables affect firms' demand for credit, banks' supply of credit, and access to credit. The paper finds first that access to finance for firms has improved over the decade for small firms, reflecting the deepening of the credit markets. However, access to credit depends strongly on information availability captured in the positive influence of collateral and credit history. Banks perceive that it is less risky to lend to firms that the banks know or that other banks know. Second, firms' loan demand is inelastic to the interest rate at the individual loan category level, possibly reflecting some screening and pricing; however, when the loans are aggregated, the effect of interest rates becomes significant and negative as expected. Third, firms loan demand and loan supply are affected by the availability of collateral and, in the case of loan demand, longer maturity. Policy implications point to the importance of reducing asymmetric information between lenders and borrowers and on collateral to alleviate financing constraints for small firms. en
dc.language English
dc.language.iso en_US
dc.publisher World Bank, Washington, DC
dc.relation.ispartofseries Policy Research Working Paper;No. 6624
dc.rights CC BY 3.0 IGO
dc.rights.uri http://creativecommons.org/licenses/by/3.0/igo/
dc.subject BORROWER
dc.subject SHORT-TERM TRADE FINANCE
dc.subject EXTERNAL FINANCING CONSTRAINTS
dc.subject INTERMEDIATION SPREADS
dc.subject CORPORATE FINANCING
dc.subject ACCESS TO FINANCE
dc.subject INFORMATION ASYMMETRY
dc.subject INSTITUTIONAL ENVIRONMENT
dc.subject WORKING CAPITAL
dc.subject EQUILIBRIUM CREDIT RATIONING
dc.subject RESERVE BANK OF AUSTRALIA
dc.subject LACK OF ACCESS
dc.subject CENTRAL BANK
dc.subject INTERNATIONAL BANK
dc.subject PRODUCTIVITY
dc.subject MARKET DEEPENING
dc.subject CREDIT HISTORY
dc.subject BANK LIQUIDITY
dc.subject INCOME STATEMENT
dc.subject INDIVIDUAL LOAN
dc.subject CREDIT LIMIT
dc.subject MARKET CONDITIONS
dc.subject INVESTMENT OPPORTUNITIES
dc.subject DEBT
dc.subject PRIVATE CREDIT
dc.subject SMALL BANKS
dc.subject BANK CREDIT
dc.subject MARKET COMPETITION
dc.subject POOR COLLATERAL
dc.subject BANKING SYSTEMS
dc.subject JUDGES
dc.subject LARGE FIRMS
dc.subject COLLATERAL REQUIREMENT
dc.subject AVAILABILITY OF COLLATERAL
dc.subject CREDIT LINE
dc.subject BUSINESS CREDIT
dc.subject USURY
dc.subject CASH FLOWS
dc.subject BANK MONITORING
dc.subject EXTERNAL FINANCING
dc.subject TAX
dc.subject DEVELOPING COUNTRIES
dc.subject TRANSACTION
dc.subject LOAN CHARACTERISTICS
dc.subject SOURCES OF FINANCE
dc.subject SMALL BUSINESS
dc.subject OVERDRAFT
dc.subject DEPENDENT
dc.subject CAPITAL STRUCTURE
dc.subject EQUILIBRIUM CREDIT
dc.subject PROFITABILITY
dc.subject BANK INTERMEDIATION
dc.subject FINANCIAL SERVICE
dc.subject MARKET LIQUIDITY
dc.subject SMALL LOANS
dc.subject JUDICIAL SYSTEM
dc.subject LOAN CATEGORY
dc.subject TRANSACTIONS COSTS
dc.subject USE OF COLLATERAL
dc.subject FINANCIAL MARKET
dc.subject CREDITWORTHINESS
dc.subject FINANCIAL INFORMATION
dc.subject RESERVE
dc.subject OVERDRAFTS
dc.subject BANK LENDING
dc.subject MARKET FAILURES
dc.subject MACROECONOMIC CONDITIONS
dc.subject COST OF CAPITAL
dc.subject CAPITAL STOCK
dc.subject REAL INTEREST RATES
dc.subject CREDITORS
dc.subject CREDIT LINES
dc.subject INVESTMENT FUNDS
dc.subject HIGH INTEREST RATES
dc.subject ECONOMIC SYSTEMS
dc.subject INVESTMENT DECISIONS
dc.subject REAL INTEREST
dc.subject BANKS
dc.subject BANKING SYSTEM
dc.subject LOAN RATE
dc.subject CONTRACT ENFORCEMENT
dc.subject INVESTMENT CLIMATE
dc.subject FINANCIAL SYSTEMS
dc.subject OPPORTUNITY COST
dc.subject INCOME GROUP
dc.subject ACCESS TO FINANCIAL SERVICES
dc.subject LACK OF CREDIT
dc.subject LEVEL OF INTEREST RATES
dc.subject LOAN MARKET
dc.subject BANK CHARGES
dc.subject LOAN CATEGORIES
dc.subject PARTNER BANK
dc.subject PUBLIC BANK
dc.subject OVERDRAFT LOANS
dc.subject BORROWING
dc.subject BANK INTEREST RATES
dc.subject INTEREST RATES
dc.subject HUMAN RESOURCES
dc.subject FINANCIAL PLANNING
dc.subject PROMISSORY NOTES
dc.subject FINANCES
dc.subject GROWTH OPPORTUNITIES
dc.subject CONTRACT ENFORCEABILITY
dc.subject LENDERS
dc.subject RETURNS
dc.subject CASH PAYMENT
dc.subject ANTI-CREDITOR
dc.subject CREDIT ACCESS
dc.subject FINANCIAL CRISIS
dc.subject LEGAL CONSTRAINTS
dc.subject PUBLIC BANKS
dc.subject LENDING INTEREST RATES
dc.subject SHORT-TERM INTEREST RATES
dc.subject BANK ACCOUNT
dc.subject MACROECONOMIC VARIABLES
dc.subject BIASES
dc.subject EQUITY RATIO
dc.subject LINE OF CREDIT
dc.subject CREDIT GROWTH
dc.subject CREDIT INSTRUMENT
dc.subject COLLATERALS
dc.subject INSTRUMENT
dc.subject REGULATORY POLICY
dc.subject JUDGE
dc.subject MONETARY POLICY
dc.subject REAL INTEREST RATE
dc.subject BANK LOAN
dc.subject MACROECONOMICS
dc.subject COURT RULING
dc.subject LOAN DEMAND
dc.subject REGISTRY SYSTEM
dc.subject PERC
dc.subject LOAN REQUEST
dc.subject CAPITAL LOANS
dc.subject BALANCE SHEET
dc.subject CREDIT MARKET
dc.subject CREDIT RECORD
dc.subject CREDIT INFORMATION
dc.subject LOAN MATURITY
dc.subject SMALL BUSINESS FINANCE
dc.subject INTEREST RATES FOR LOAN
dc.subject COLLATERAL
dc.subject INVENTORIES
dc.subject ACCESS TO CREDIT
dc.subject OUTSTANDING DEBT
dc.subject PRIVATE BANKS
dc.subject BANK LENDING RELATIONSHIP
dc.subject EMERGING MARKET
dc.subject FINANCIAL STUDIES
dc.subject DISCRIMINATION
dc.subject OBSTACLES TO GROWTH
dc.subject USURY LAWS
dc.subject INVESTMENT DECISION
dc.subject INTERNAL FINANCING
dc.subject CONTRACT DESIGN
dc.subject CD
dc.subject JOB CREATION
dc.subject CREDITOR CLAIM
dc.subject ACCESS TO BANK
dc.subject BANKING CRISIS
dc.subject BANK LOANS
dc.subject DOMESTIC BANK
dc.subject SETTLEMENT
dc.subject MATURITIES
dc.subject STOCK MARKETS
dc.subject ACCESS TO FINANCING
dc.subject BANKING MARKETS
dc.subject EXCLUSION
dc.subject CREDIT RISK
dc.subject LACK OF COMPETITION
dc.subject TAXATION
dc.subject JURISDICTION
dc.subject CREDIT RATIONING
dc.subject DOMESTIC CREDIT
dc.subject REGISTRY DATA
dc.subject TERM CREDIT
dc.subject FINANCING CONSTRAINT
dc.subject FINANCING CONSTRAINTS
dc.subject BANK FINANCING
dc.subject JUDICIAL EXECUTION
dc.subject MARKET VALUE
dc.subject TOTAL_DEBT
dc.subject INTEREST RATE VOLATILITY
dc.subject APPLICATION PROCEDURES
dc.subject ASYMMETRIC INFORMATION
dc.subject MARKET STRUCTURE
dc.subject TRADE CREDITS
dc.subject COMMERCIAL BANKS
dc.subject LIABILITY
dc.subject LOAN
dc.subject CREDIT REGISTRY
dc.subject CORRUPTION
dc.subject INVESTMENT FINANCING
dc.subject DEMAND FOR CREDIT
dc.subject DIRECTED CREDIT
dc.subject OUTSTANDING DEBTS
dc.subject MACROECONOMIC INSTABILITY
dc.subject DEBTORS
dc.subject LOAN CONTRACTS
dc.subject MONETARY FUND
dc.subject POOR CREDIT
dc.subject FINANCIAL INSTITUTIONS
dc.subject INFLATION
dc.subject INTERNAL FUNDS
dc.subject BUSINESS CYCLE
dc.subject CREDIT REGISTRIES
dc.subject DEBT OUTSTANDING
dc.subject CASH FLOW
dc.subject INTEREST RATE
dc.subject LOAN VOLUMES
dc.subject CREDIT MARKETS
dc.subject ECONOMIC ACTIVITY
dc.subject FINANCIAL INTERMEDIATION
dc.subject HOUSEHOLDS
dc.subject CORPORATE INVESTMENT
dc.subject LACK OF COLLATERAL
dc.subject TAX RATES
dc.subject FINANCIAL SERVICE PROVIDERS
dc.subject POOR CREDIT HISTORY
dc.subject COST OF CREDIT
dc.subject CREDIT CRUNCH
dc.subject SUPPLY OF CREDIT
dc.subject PROMISSORY NOTE
dc.subject RESERVE BANK
dc.subject CREDITOR
dc.title Assessing Firms' Financing Constraints in Brazil en
dc.rights.holder World Bank


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