Quantifying credit gaps using survey data on discouraged borrowers

Arbeitspapier

The credit gap in this study is given by the financing needs of firms that are bankable but discouraged from applying for a loan. To quantify the credit gap, we combine a scoring model that assesses the creditworthiness of discouraged firms with a credit allocation rule. Our study covers 35 emerging markets and developing economies and uses the 2018-2020 EBRD-EIB-World Bank Enterprise Survey. We show that on average discouraged firms are less creditworthy than successful applicants. Nonetheless, the share of bankable discouraged firms is large, suggesting inefficient credit rationing. The baseline results point to an aggregate credit gap of 8.4% of GDP with significant variation across countries. SMEs account for more than two-thirds of the total, reflecting both their contribution to economic activity and the fact that they are more likely to be credit-constrained.

Object Details

• ISBN: 978-92-861-5621-2
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: EIB Working Papers ; No. 2023/06

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Empirical Analysis ; Rationing; Licensing ; Money Supply; Credit; Money Multipliers ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: credit rationing ; discouraged borrowers ; firm-level data ; EMDEs

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Akbas, Ozan E. ; Betz, Frank ; Gattini, Luca
• Event: Veröffentlichung
• (who): European Investment Bank (EIB)
• (where): Luxembourg
• (when): 2023

Further information

• DOI: doi:10.2867/292116
• Handle: http://hdl.handle.net/10419/280955
• Last update: 10.03.2025, 11:44 AM CET