Assessing Firms' Financing Constraints in Brazil
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. Sp...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/09/18321821/assessing-firms-financing-constraints-brazil http://hdl.handle.net/10986/16842 |
| id |
okr-10986-16842 |
|---|---|
| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO BANK ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO FINANCING ANTI-CREDITOR APPLICATION PROCEDURES ASYMMETRIC INFORMATION AVAILABILITY OF COLLATERAL BALANCE SHEET BANK ACCOUNT BANK CHARGES BANK CREDIT BANK FINANCING BANK INTEREST RATES BANK INTERMEDIATION BANK LENDING BANK LENDING RELATIONSHIP BANK LIQUIDITY BANK LOAN BANK LOANS BANK MONITORING BANKING CRISIS BANKING MARKETS BANKING SYSTEM BANKING SYSTEMS BANKS BIASES BORROWER BORROWING BUSINESS CREDIT BUSINESS CYCLE CAPITAL LOANS CAPITAL STOCK CAPITAL STRUCTURE CASH FLOW CASH FLOWS CASH PAYMENT CD CENTRAL BANK COLLATERAL COLLATERAL REQUIREMENT COLLATERALS COMMERCIAL BANKS CONTRACT DESIGN CONTRACT ENFORCEABILITY CONTRACT ENFORCEMENT CORPORATE FINANCING CORPORATE INVESTMENT CORRUPTION COST OF CAPITAL COST OF CREDIT COURT RULING CREDIT ACCESS CREDIT CRUNCH CREDIT GROWTH CREDIT HISTORY CREDIT INFORMATION CREDIT INSTRUMENT CREDIT LIMIT CREDIT LINE CREDIT LINES CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT RECORD CREDIT REGISTRIES CREDIT REGISTRY CREDIT RISK CREDITOR CREDITOR CLAIM CREDITORS CREDITWORTHINESS DEBT DEBT OUTSTANDING DEBTORS DEMAND FOR CREDIT DEPENDENT DEVELOPING COUNTRIES DIRECTED CREDIT DISCRIMINATION DOMESTIC BANK DOMESTIC CREDIT ECONOMIC ACTIVITY ECONOMIC SYSTEMS EMERGING MARKET EQUILIBRIUM CREDIT EQUILIBRIUM CREDIT RATIONING EQUITY RATIO EXCLUSION EXTERNAL FINANCING EXTERNAL FINANCING CONSTRAINTS FINANCES FINANCIAL CRISIS FINANCIAL INFORMATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL PLANNING FINANCIAL SERVICE FINANCIAL SERVICE PROVIDERS FINANCIAL STUDIES FINANCIAL SYSTEMS FINANCING CONSTRAINT FINANCING CONSTRAINTS GROWTH OPPORTUNITIES HIGH INTEREST RATES HOUSEHOLDS HUMAN RESOURCES INCOME GROUP INCOME STATEMENT INDIVIDUAL LOAN INFLATION INFORMATION ASYMMETRY INSTITUTIONAL ENVIRONMENT INSTRUMENT INTEREST RATE INTEREST RATE VOLATILITY INTEREST RATES INTEREST RATES FOR LOAN INTERMEDIATION SPREADS INTERNAL FINANCING INTERNAL FUNDS INTERNATIONAL BANK INVENTORIES INVESTMENT CLIMATE INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FINANCING INVESTMENT FUNDS INVESTMENT OPPORTUNITIES JOB CREATION JUDGE JUDGES JUDICIAL EXECUTION JUDICIAL SYSTEM JURISDICTION LACK OF ACCESS LACK OF COLLATERAL LACK OF COMPETITION LACK OF CREDIT LARGE FIRMS LEGAL CONSTRAINTS LENDERS LENDING INTEREST RATES LEVEL OF INTEREST RATES LIABILITY LINE OF CREDIT LOAN LOAN CATEGORIES LOAN CATEGORY LOAN CHARACTERISTICS LOAN CONTRACTS LOAN DEMAND LOAN MARKET LOAN MATURITY LOAN RATE LOAN REQUEST LOAN VOLUMES MACROECONOMIC CONDITIONS MACROECONOMIC INSTABILITY MACROECONOMIC VARIABLES MACROECONOMICS MARKET COMPETITION MARKET CONDITIONS MARKET DEEPENING MARKET FAILURES MARKET LIQUIDITY MARKET STRUCTURE MARKET VALUE MATURITIES MONETARY FUND MONETARY POLICY OBSTACLES TO GROWTH OPPORTUNITY COST OUTSTANDING DEBT OUTSTANDING DEBTS OVERDRAFT OVERDRAFT LOANS OVERDRAFTS PARTNER BANK PERC POOR COLLATERAL POOR CREDIT POOR CREDIT HISTORY PRIVATE BANKS PRIVATE CREDIT PRODUCTIVITY PROFITABILITY PROMISSORY NOTE PROMISSORY NOTES PUBLIC BANK PUBLIC BANKS REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REGISTRY DATA REGISTRY SYSTEM REGULATORY POLICY RESERVE RESERVE BANK RESERVE BANK OF AUSTRALIA RETURNS SETTLEMENT SHORT-TERM INTEREST RATES SHORT-TERM TRADE FINANCE SMALL BANKS SMALL BUSINESS SMALL BUSINESS FINANCE SMALL LOANS SOURCES OF FINANCE STOCK MARKETS SUPPLY OF CREDIT TAX TAX RATES TAXATION TERM CREDIT TOTAL_DEBT TRADE CREDITS TRANSACTION TRANSACTIONS COSTS USE OF COLLATERAL USURY USURY LAWS WORKING CAPITAL |
| spellingShingle |
ACCESS TO BANK ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO FINANCING ANTI-CREDITOR APPLICATION PROCEDURES ASYMMETRIC INFORMATION AVAILABILITY OF COLLATERAL BALANCE SHEET BANK ACCOUNT BANK CHARGES BANK CREDIT BANK FINANCING BANK INTEREST RATES BANK INTERMEDIATION BANK LENDING BANK LENDING RELATIONSHIP BANK LIQUIDITY BANK LOAN BANK LOANS BANK MONITORING BANKING CRISIS BANKING MARKETS BANKING SYSTEM BANKING SYSTEMS BANKS BIASES BORROWER BORROWING BUSINESS CREDIT BUSINESS CYCLE CAPITAL LOANS CAPITAL STOCK CAPITAL STRUCTURE CASH FLOW CASH FLOWS CASH PAYMENT CD CENTRAL BANK COLLATERAL COLLATERAL REQUIREMENT COLLATERALS COMMERCIAL BANKS CONTRACT DESIGN CONTRACT ENFORCEABILITY CONTRACT ENFORCEMENT CORPORATE FINANCING CORPORATE INVESTMENT CORRUPTION COST OF CAPITAL COST OF CREDIT COURT RULING CREDIT ACCESS CREDIT CRUNCH CREDIT GROWTH CREDIT HISTORY CREDIT INFORMATION CREDIT INSTRUMENT CREDIT LIMIT CREDIT LINE CREDIT LINES CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT RECORD CREDIT REGISTRIES CREDIT REGISTRY CREDIT RISK CREDITOR CREDITOR CLAIM CREDITORS CREDITWORTHINESS DEBT DEBT OUTSTANDING DEBTORS DEMAND FOR CREDIT DEPENDENT DEVELOPING COUNTRIES DIRECTED CREDIT DISCRIMINATION DOMESTIC BANK DOMESTIC CREDIT ECONOMIC ACTIVITY ECONOMIC SYSTEMS EMERGING MARKET EQUILIBRIUM CREDIT EQUILIBRIUM CREDIT RATIONING EQUITY RATIO EXCLUSION EXTERNAL FINANCING EXTERNAL FINANCING CONSTRAINTS FINANCES FINANCIAL CRISIS FINANCIAL INFORMATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL PLANNING FINANCIAL SERVICE FINANCIAL SERVICE PROVIDERS FINANCIAL STUDIES FINANCIAL SYSTEMS FINANCING CONSTRAINT FINANCING CONSTRAINTS GROWTH OPPORTUNITIES HIGH INTEREST RATES HOUSEHOLDS HUMAN RESOURCES INCOME GROUP INCOME STATEMENT INDIVIDUAL LOAN INFLATION INFORMATION ASYMMETRY INSTITUTIONAL ENVIRONMENT INSTRUMENT INTEREST RATE INTEREST RATE VOLATILITY INTEREST RATES INTEREST RATES FOR LOAN INTERMEDIATION SPREADS INTERNAL FINANCING INTERNAL FUNDS INTERNATIONAL BANK INVENTORIES INVESTMENT CLIMATE INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FINANCING INVESTMENT FUNDS INVESTMENT OPPORTUNITIES JOB CREATION JUDGE JUDGES JUDICIAL EXECUTION JUDICIAL SYSTEM JURISDICTION LACK OF ACCESS LACK OF COLLATERAL LACK OF COMPETITION LACK OF CREDIT LARGE FIRMS LEGAL CONSTRAINTS LENDERS LENDING INTEREST RATES LEVEL OF INTEREST RATES LIABILITY LINE OF CREDIT LOAN LOAN CATEGORIES LOAN CATEGORY LOAN CHARACTERISTICS LOAN CONTRACTS LOAN DEMAND LOAN MARKET LOAN MATURITY LOAN RATE LOAN REQUEST LOAN VOLUMES MACROECONOMIC CONDITIONS MACROECONOMIC INSTABILITY MACROECONOMIC VARIABLES MACROECONOMICS MARKET COMPETITION MARKET CONDITIONS MARKET DEEPENING MARKET FAILURES MARKET LIQUIDITY MARKET STRUCTURE MARKET VALUE MATURITIES MONETARY FUND MONETARY POLICY OBSTACLES TO GROWTH OPPORTUNITY COST OUTSTANDING DEBT OUTSTANDING DEBTS OVERDRAFT OVERDRAFT LOANS OVERDRAFTS PARTNER BANK PERC POOR COLLATERAL POOR CREDIT POOR CREDIT HISTORY PRIVATE BANKS PRIVATE CREDIT PRODUCTIVITY PROFITABILITY PROMISSORY NOTE PROMISSORY NOTES PUBLIC BANK PUBLIC BANKS REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REGISTRY DATA REGISTRY SYSTEM REGULATORY POLICY RESERVE RESERVE BANK RESERVE BANK OF AUSTRALIA RETURNS SETTLEMENT SHORT-TERM INTEREST RATES SHORT-TERM TRADE FINANCE SMALL BANKS SMALL BUSINESS SMALL BUSINESS FINANCE SMALL LOANS SOURCES OF FINANCE STOCK MARKETS SUPPLY OF CREDIT TAX TAX RATES TAXATION TERM CREDIT TOTAL_DEBT TRADE CREDITS TRANSACTION TRANSACTIONS COSTS USE OF COLLATERAL USURY USURY LAWS WORKING CAPITAL Claessens, Stijn Sakho, Yaye Seynabou Assessing Firms' Financing Constraints in Brazil |
| geographic_facet |
Latin America & Caribbean Brazil |
| relation |
Policy Research Working Paper;No. 6624 |
| description |
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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Claessens, Stijn Sakho, Yaye Seynabou |
| author_facet |
Claessens, Stijn Sakho, Yaye Seynabou |
| author_sort |
Claessens, Stijn |
| title |
Assessing Firms' Financing Constraints in Brazil |
| title_short |
Assessing Firms' Financing Constraints in Brazil |
| title_full |
Assessing Firms' Financing Constraints in Brazil |
| title_fullStr |
Assessing Firms' Financing Constraints in Brazil |
| title_full_unstemmed |
Assessing Firms' Financing Constraints in Brazil |
| title_sort |
assessing firms' financing constraints in brazil |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2013/09/18321821/assessing-firms-financing-constraints-brazil http://hdl.handle.net/10986/16842 |
| _version_ |
1764434667531927552 |
| spelling |
okr-10986-168422021-04-23T14:03:32Z Assessing Firms' Financing Constraints in Brazil Claessens, Stijn Sakho, Yaye Seynabou ACCESS TO BANK ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO FINANCING ANTI-CREDITOR APPLICATION PROCEDURES ASYMMETRIC INFORMATION AVAILABILITY OF COLLATERAL BALANCE SHEET BANK ACCOUNT BANK CHARGES BANK CREDIT BANK FINANCING BANK INTEREST RATES BANK INTERMEDIATION BANK LENDING BANK LENDING RELATIONSHIP BANK LIQUIDITY BANK LOAN BANK LOANS BANK MONITORING BANKING CRISIS BANKING MARKETS BANKING SYSTEM BANKING SYSTEMS BANKS BIASES BORROWER BORROWING BUSINESS CREDIT BUSINESS CYCLE CAPITAL LOANS CAPITAL STOCK CAPITAL STRUCTURE CASH FLOW CASH FLOWS CASH PAYMENT CD CENTRAL BANK COLLATERAL COLLATERAL REQUIREMENT COLLATERALS COMMERCIAL BANKS CONTRACT DESIGN CONTRACT ENFORCEABILITY CONTRACT ENFORCEMENT CORPORATE FINANCING CORPORATE INVESTMENT CORRUPTION COST OF CAPITAL COST OF CREDIT COURT RULING CREDIT ACCESS CREDIT CRUNCH CREDIT GROWTH CREDIT HISTORY CREDIT INFORMATION CREDIT INSTRUMENT CREDIT LIMIT CREDIT LINE CREDIT LINES CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT RECORD CREDIT REGISTRIES CREDIT REGISTRY CREDIT RISK CREDITOR CREDITOR CLAIM CREDITORS CREDITWORTHINESS DEBT DEBT OUTSTANDING DEBTORS DEMAND FOR CREDIT DEPENDENT DEVELOPING COUNTRIES DIRECTED CREDIT DISCRIMINATION DOMESTIC BANK DOMESTIC CREDIT ECONOMIC ACTIVITY ECONOMIC SYSTEMS EMERGING MARKET EQUILIBRIUM CREDIT EQUILIBRIUM CREDIT RATIONING EQUITY RATIO EXCLUSION EXTERNAL FINANCING EXTERNAL FINANCING CONSTRAINTS FINANCES FINANCIAL CRISIS FINANCIAL INFORMATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL PLANNING FINANCIAL SERVICE FINANCIAL SERVICE PROVIDERS FINANCIAL STUDIES FINANCIAL SYSTEMS FINANCING CONSTRAINT FINANCING CONSTRAINTS GROWTH OPPORTUNITIES HIGH INTEREST RATES HOUSEHOLDS HUMAN RESOURCES INCOME GROUP INCOME STATEMENT INDIVIDUAL LOAN INFLATION INFORMATION ASYMMETRY INSTITUTIONAL ENVIRONMENT INSTRUMENT INTEREST RATE INTEREST RATE VOLATILITY INTEREST RATES INTEREST RATES FOR LOAN INTERMEDIATION SPREADS INTERNAL FINANCING INTERNAL FUNDS INTERNATIONAL BANK INVENTORIES INVESTMENT CLIMATE INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FINANCING INVESTMENT FUNDS INVESTMENT OPPORTUNITIES JOB CREATION JUDGE JUDGES JUDICIAL EXECUTION JUDICIAL SYSTEM JURISDICTION LACK OF ACCESS LACK OF COLLATERAL LACK OF COMPETITION LACK OF CREDIT LARGE FIRMS LEGAL CONSTRAINTS LENDERS LENDING INTEREST RATES LEVEL OF INTEREST RATES LIABILITY LINE OF CREDIT LOAN LOAN CATEGORIES LOAN CATEGORY LOAN CHARACTERISTICS LOAN CONTRACTS LOAN DEMAND LOAN MARKET LOAN MATURITY LOAN RATE LOAN REQUEST LOAN VOLUMES MACROECONOMIC CONDITIONS MACROECONOMIC INSTABILITY MACROECONOMIC VARIABLES MACROECONOMICS MARKET COMPETITION MARKET CONDITIONS MARKET DEEPENING MARKET FAILURES MARKET LIQUIDITY MARKET STRUCTURE MARKET VALUE MATURITIES MONETARY FUND MONETARY POLICY OBSTACLES TO GROWTH OPPORTUNITY COST OUTSTANDING DEBT OUTSTANDING DEBTS OVERDRAFT OVERDRAFT LOANS OVERDRAFTS PARTNER BANK PERC POOR COLLATERAL POOR CREDIT POOR CREDIT HISTORY PRIVATE BANKS PRIVATE CREDIT PRODUCTIVITY PROFITABILITY PROMISSORY NOTE PROMISSORY NOTES PUBLIC BANK PUBLIC BANKS REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REGISTRY DATA REGISTRY SYSTEM REGULATORY POLICY RESERVE RESERVE BANK RESERVE BANK OF AUSTRALIA RETURNS SETTLEMENT SHORT-TERM INTEREST RATES SHORT-TERM TRADE FINANCE SMALL BANKS SMALL BUSINESS SMALL BUSINESS FINANCE SMALL LOANS SOURCES OF FINANCE STOCK MARKETS SUPPLY OF CREDIT TAX TAX RATES TAXATION TERM CREDIT TOTAL_DEBT TRADE CREDITS TRANSACTION TRANSACTIONS COSTS USE OF COLLATERAL USURY USURY LAWS WORKING CAPITAL 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. 2014-02-03T21:36:30Z 2014-02-03T21:36:30Z 2013-09 http://documents.worldbank.org/curated/en/2013/09/18321821/assessing-firms-financing-constraints-brazil http://hdl.handle.net/10986/16842 English en_US Policy Research Working Paper;No. 6624 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Brazil |