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The effect of size and productivity on borrowing discouragement for small firms in Colombia

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  • Jaulín-Méndez, Oscar

Abstract

I estimate the effect micro firms’ size and productivity have on the probability of becoming a discouraged borrower: firms that do not use credit from the formal financial system despite needing it. I also estimate the effect that size and productivity have on the probability of becoming accepted in the event of a formal credit request. Using a trivariate probit model that corrects for selection biases, I find that productivity and size (number of employees) reduce the likelihood of becoming discouraged. Both variables are related to a higher probability of being accepted in formal credit requests.

Suggested Citation

  • Jaulín-Méndez, Oscar, 2022. "The effect of size and productivity on borrowing discouragement for small firms in Colombia," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(4).
    • Handle: RePEc:eee:lajcba:v:3:y:2022:i:4:s266614382200031x
    DOI: 10.1016/j.latcb.2022.100077
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    References listed on IDEAS

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    More about this item

    Keywords

    Discouraged borrowers; Trivariate probit; Micro firms;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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