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Entrepreneur Education and Firm Credit Outcomes

Author

Listed:
  • Yusuf Emre Akgunduz
  • Abdurrahman B. Aydemir
  • Halil Ibrahim Aydin

Abstract

We estimate the causal effects of entrepreneur education on credit outcomes. We link credit and business registries and identify the effects of education on access to credit, loan terms and default using a compulsory schooling reform implemented in Türkiye. More educated cohorts have higher access to credit, receive 3.3 percent larger loans and pay 0.23 percentage points lower interest rates compared to less educated cohorts despite no differences in borrowers' creditworthiness. We test alternative explanations for our findings and conclude that education reduces credit search costs and enables borrowers to shop around banks for better loan terms.

Suggested Citation

  • Yusuf Emre Akgunduz & Abdurrahman B. Aydemir & Halil Ibrahim Aydin, 2023. "Entrepreneur Education and Firm Credit Outcomes," Working Papers 2301, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:2301
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2023/23-01
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    More about this item

    Keywords

    Compulsory schooling; Entrepreneurship; Bank loans;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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