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Credit Constraints and Investment Behavior in Mexico’s Rural Economy

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dc.contributor.author Sanchez, Susana M.
dc.contributor.author Love, Inessa
dc.date.accessioned 2012-03-19T19:11:50Z
dc.date.available 2012-03-19T19:11:50Z
dc.date.issued 2009-08-01
dc.identifier.uri http://hdl.handle.net/10986/4207
dc.description.abstract This paper uses two recently completed surveys of individual entrepreneurs (farmers and microentrepreneurs) and registered enterprises (agricultural and nonagricultural) operating in Mexico s rural sector to provide new evidence about the factors influencing the incidence of credit constraints and investment behavior. To measure the incidence of credit constraints, the authors use self-reported information on whether economic agents have a demand for loans, separating formal and informal markets. They define credit constraints as a situation where rural agents report an unsatisfied demand for loans (formal or informal), which originates from rural agents having projects that are too risky or from impediments hindering the ability of rural agents and lenders to reduce information asymmetries. The authors find that the self-reported demand for loans is low. Nevertheless, the incidence of credit constraints is pervasive, especially among individual entrepreneurs. The low use of loans has consequences for the amount of investments that occur in the rural economy, posing a major obstacle to Mexico s convergence towards its NAFTA partners. The empirical analysis, which includes proxies of business prospects and creditworthiness, shows that improving the availability of loans to credit constrained agents would increase the number of agents making investments and their investment to capital ratios. en
dc.language English
dc.relation.ispartofseries Policy Research working paper ; no. WPS 5014
dc.rights CC BY 3.0 IGO
dc.rights.uri http://creativecommons.org/licenses/by/3.0/igo/
dc.subject BORROWER
dc.subject DEVELOPMENT BANKS
dc.subject ACCESS TO EXTERNAL FINANCE
dc.subject ACCESS TO FINANCE
dc.subject WORLD INTEREST RATE
dc.subject GOOD CREDIT HISTORY
dc.subject WORK EXPERIENCE
dc.subject LOW EARNINGS
dc.subject ACCESS TO LOANS
dc.subject INTERNATIONAL BANK
dc.subject PRODUCTIVITY
dc.subject SOURCE OF FUNDS
dc.subject DISCOUNT RATES
dc.subject CREDIT HISTORY
dc.subject COLLEGE EDUCATION
dc.subject REGRESSION ANALYSIS
dc.subject FOREIGN FINANCING
dc.subject INVESTMENT OPPORTUNITIES
dc.subject DEBT
dc.subject SOURCES OF INCOME
dc.subject POOR COLLATERAL
dc.subject HOUSEHOLD INCOME
dc.subject LARGE FIRMS
dc.subject APPLICATION DECISION
dc.subject TRAINING PROGRAMS
dc.subject INFORMATION ASYMMETRIES
dc.subject MARKETING STRATEGIES
dc.subject PROVIDERS OF CREDIT
dc.subject TRADE CREDIT
dc.subject CASH FLOWS
dc.subject EXTERNAL FINANCING
dc.subject ACCESS TO CAPITAL
dc.subject FINANCIAL TRANSACTIONS
dc.subject TRANSACTION
dc.subject FINANCIAL SECTOR
dc.subject TECHNICAL ASSISTANCE
dc.subject CAPITAL MARKETS
dc.subject SMALL LOANS
dc.subject LAND MARKETS
dc.subject TRANSACTIONS COSTS
dc.subject INVESTMENT BEHAVIOR
dc.subject ADVISORY SERVICES
dc.subject FINANCIAL MARKET
dc.subject SMALLER FIRMS
dc.subject CREDITWORTHINESS
dc.subject RETAIL BUSINESSES
dc.subject LOAN APPLICATIONS
dc.subject BOND
dc.subject FINANCIAL CONSTRAINTS
dc.subject OUTREACH
dc.subject LOANS FROM FRIENDS
dc.subject BANK LENDING
dc.subject QUESTIONNAIRES
dc.subject FINANCIAL INSTRUMENTS
dc.subject VALUE OF ASSETS
dc.subject CAPITAL STOCK
dc.subject LOAN REQUESTS
dc.subject PERSONAL SAVINGS
dc.subject MONEYLENDERS
dc.subject SMALL BUSINESSES
dc.subject SAVINGS PRODUCTS
dc.subject CREDITORS
dc.subject INFORMAL LOAN
dc.subject HIGH INTEREST RATES
dc.subject INDIVIDUAL ENTREPRENEURS
dc.subject LENDER
dc.subject INVESTMENT DECISIONS
dc.subject EMPLOYERS
dc.subject TRAINING PROGRAM
dc.subject ACCESS TO FINANCIAL SERVICES
dc.subject LACK OF CREDIT
dc.subject LOAN MARKET
dc.subject BUSINESS PLANS
dc.subject RESEARCH ASSISTANCE
dc.subject FORMAL SOURCES OF CREDIT
dc.subject CREDIT INFORMATION REGISTRIES
dc.subject CAPITAL EXPENDITURES
dc.subject OLDER INDIVIDUAL
dc.subject SENIOR
dc.subject BORROWING
dc.subject INFORMAL LENDERS
dc.subject INTEREST RATES
dc.subject FORMAL EDUCATION
dc.subject INHERITANCE
dc.subject ISSUE OF ACCESS
dc.subject SOURCE OF CREDIT
dc.subject GROWTH OPPORTUNITIES
dc.subject ADDITIONAL INCOME
dc.subject LENDING DECISIONS
dc.subject LENDERS
dc.subject ACCESS TO LOAN
dc.subject LEGAL SYSTEM
dc.subject LEGAL CONSTRAINTS
dc.subject SOCIAL CAPITAL
dc.subject FINANCIAL ECONOMIST
dc.subject LANGUAGE BARRIER
dc.subject QUESTIONNAIRE
dc.subject INFORMAL BORROWING
dc.subject CREDIT CONSTRAINT
dc.subject SALES GROWTH
dc.subject INFORMAL SAVINGS
dc.subject ECONOMIC AGENT
dc.subject CURRENT INTEREST RATE
dc.subject SOURCES OF FUNDS
dc.subject LOAN DEMAND
dc.subject SAVINGS
dc.subject LOAN PROCESS
dc.subject SALE
dc.subject EXPENDITURES
dc.subject ENTREPRENEUR
dc.subject LOAN APPLICATION PROCEDURES
dc.subject GOOD CREDIT
dc.subject PRIVATE BANK
dc.subject FINANCIAL LIBERALIZATION
dc.subject BUSINESS OPERATIONS
dc.subject BALANCE SHEET
dc.subject LAND HOLDINGS
dc.subject AMOUNT OF CREDIT
dc.subject CREDIT INFORMATION
dc.subject SECONDARY EDUCATION
dc.subject FINANCIAL DEPTH
dc.subject FINANCING COSTS
dc.subject INVESTMENT CHOICE
dc.subject INFORMAL FINANCIAL MARKETS
dc.subject COLLATERAL
dc.subject MORAL HAZARD
dc.subject ACCESS TO CREDIT
dc.subject LOAN APPLICANTS
dc.subject SOCIAL NETWORK
dc.subject DECISION TREE
dc.subject CONSTRAINTS ON INVESTMENT
dc.subject LACK OF KNOWLEDGE
dc.subject URBAN AREAS
dc.subject INFORMATION TECHNOLOGY
dc.subject ENTREPRENEURIAL ABILITY
dc.subject DISCRIMINATION
dc.subject INFORMAL LOANS
dc.subject TRUSTEE
dc.subject SAVINGS MECHANISMS
dc.subject INVESTMENT DECISION
dc.subject ACCESS TO INFORMATION
dc.subject LOAN PRODUCTS
dc.subject LOANS FOR FARMERS
dc.subject PROBABILITY OF DEFAULT
dc.subject BANK OFFICIALS
dc.subject DIRECT FINANCING
dc.subject INFORMAL CREDIT
dc.subject NEW MARKETS
dc.subject PARENT COMPANY
dc.subject RURAL LOAN
dc.subject ENTREPRENEURIAL ACTIVITIES
dc.subject LOAN CONTRACT
dc.subject BANKING CRISIS
dc.subject BANK LOANS
dc.subject LEVELS OF CREDIT
dc.subject ECONOMIC GROWTH
dc.subject INVESTING
dc.subject LABOR MARKET
dc.subject GENDER
dc.subject REPAYMENT
dc.subject CREDIT RISK
dc.subject CREDIT CONSTRAINTS
dc.subject TRANSACTION COSTS
dc.subject CREDIT RATIONING
dc.subject REPAYMENT INCENTIVES
dc.subject SOURCE OF INCOME
dc.subject CREDIT TRANSACTIONS
dc.subject TYPE OF LENDERS
dc.subject EARNINGS
dc.subject MARKET INTEREST RATES
dc.subject FINANCIAL MARKETS
dc.subject ASYMMETRIC INFORMATION
dc.subject COLLATERAL REQUIREMENTS
dc.subject CREDIT UNIONS
dc.subject LOANS TO FARMERS
dc.subject STOCK EXCHANGE
dc.subject FINANCIAL DEVELOPMENT
dc.subject LARGE ENTERPRISES
dc.subject REMITTANCES
dc.subject LOAN MARKETS
dc.subject PROBABILITY
dc.subject LOAN APPLICATION
dc.subject ENTREPRENEURIAL ABILITIES
dc.subject INVESTMENT PATTERNS
dc.subject BANK DEPOSITS
dc.subject CORRUPTION
dc.subject FARMERS
dc.subject CAPITAL GOODS
dc.subject SMALL BORROWERS
dc.subject SAVINGS BEHAVIOR
dc.subject DEBTORS
dc.subject PURCHASES
dc.subject LOAN CONTRACTS
dc.subject INFLATION
dc.subject POOR CREDIT
dc.subject TYPES OF LENDERS
dc.subject DEBT ISSUES
dc.subject AGRICULTURAL SECTOR
dc.subject EXTERNAL FUNDS
dc.subject LEVEL OF EDUCATION
dc.subject LONG-TERM LOANS
dc.subject INTERNAL FUNDS
dc.subject CASH FLOW
dc.subject INTEREST RATE
dc.subject CREDIT NEEDS
dc.subject FARMER
dc.subject ECONOMIC ACTIVITY
dc.subject CREDIT MARKETS
dc.subject FINANCIAL INTERMEDIATION
dc.subject HOUSEHOLDS
dc.subject TYPE OF LENDER
dc.subject PRIMARY EDUCATION
dc.subject EDUCATIONAL ATTAINMENT
dc.subject ECONOMIC AGENTS
dc.subject INVESTMENT COMPANIES
dc.subject MARKETING
dc.subject SUPPLY OF CREDIT
dc.subject SALES
dc.subject COLLATERAL LAWS
dc.subject REAL ESTATE
dc.subject FIXED ASSETS
dc.title Credit Constraints and Investment Behavior in Mexico’s Rural Economy en
dc.rights.holder World Bank


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