Friendship and money, oil and water? Credit constraints and "Family and Friends" finance

Konferenzbeitrag

The use of informal finance is primarily discussed in the context of developing countries and start-up businesses. Survey data used in this study, however, shows that ``Family and Friends'' (F\&F) finance is also remarkably widespread among established firms in Germany, a highly developed country. Establishing a causal link, Instrumental Variables estimations in this study show that firms use F\&F finance in response to credit constraints. Considering that welfare gains from financial intermediation no longer materialize when firms go informal, this result is of utmost importance in the analysis of the consequences of a non-functioning financial system, even in developed economies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Financial Economics V ; No. E10-V2

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors ; Estimation: General

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Wiegand, Manuel
• Event: Veröffentlichung
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/112965
• Last update: 10.03.2025, 11:47 AM CET