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Bank Accessibility and Entrepreneurial Activity: Evidence from Brazil

Author

Listed:
  • Rodrigo de Oliveira Leite

    (COPPEAD Graduate School of Business, Federal University of Rio de Janeiro, Rio de Janeiro 21941-918, Brazil)

  • Matheus Moura

    (EBAPE Brazilian School of Public and Business Administration, Getulio Vargas Foundation, Rio de Janeiro 22250-900, Brazil)

  • Layla Mendes

    (EPGE Brazilian School of Economics and Finance, Fundação Getulio Vargas, São Paulo 01313-902, Brazil)

  • Leonardo Henrique Lima de Pilla

    (EBAPE Brazilian School of Public and Business Administration, Getulio Vargas Foundation, Rio de Janeiro 22250-900, Brazil
    ISC Serzedello Corrêa Institute, School of Government of the Brazilian Federal Court of Accounts, Brasília 72200-003, Brazil)

Abstract

A robust body of research suggests that entrepreneurial activities benefit from financial development and external financing access. However, there is a gap in understanding how and the extent to which the accessibility to financial services is associated with entrepreneurial activity. Based on an unbalanced panel of 2104 Brazilian municipalities spanning 2010–2021 and comprising 23,769 municipality-year observations, our results not only confirm that bank accessibility, proxied by the number of bank branches in a municipality, is positively correlated with the number of firms but also that the relationship is nonlinear, being stronger for larger firms. By estimating a model using first differences, we find a positive causal impact of an additional bank branch on the number of firms in a municipality of 0.2% (about 26 extra firms on average). Our study contributes to the literature by corroborating that access to external financing services shapes entrepreneurial activities.

Suggested Citation

  • Rodrigo de Oliveira Leite & Matheus Moura & Layla Mendes & Leonardo Henrique Lima de Pilla, 2024. "Bank Accessibility and Entrepreneurial Activity: Evidence from Brazil," IJFS, MDPI, vol. 12(2), pages 1-11, May.
    • Handle: RePEc:gam:jijfss:v:12:y:2024:i:2:p:50-:d:1401622
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    References listed on IDEAS

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    2. Nakane, Marcio I. & Weintraub, Daniela B., 2005. "Bank privatization and productivity: Evidence for Brazil," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2259-2289, August.
    3. Beck, Thorsten & Levine, Ross & Loayza, Norman, 2000. "Finance and the sources of growth," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 261-300.
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