Work

What hinders and what enhances small enterprises’ access to formal credit in India?

Year: 2015

Type: article

Abstract: We investigate enterprise level factors affecting access to formal credit for small enterprises in India by employing a probit sample selection model. Our results indicate that enterprise size, owners’ education level, being registered under an agency and being involved in diversified activities are positively associated with access to formal credit. However, the ownership of land that can be used as collateral is negatively associated with the likelihood of receiving formal credit. This may be due to an obsolete land administration system resulting in high transaction costs of land as collateral. These results provide some insights into the factors to improve credit constraints for small enterprises in India.

Source: Review of Development Finance

DOI: 10.1016/j.rdf.2015.05.002

Authors: Yuko Nikaido, Jesim Pais, Mandira Sarma

Institutions: Musashi University, Jawaharlal Nehru University

Language: English

Topic: Microfinance and Financial Inclusion

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Funders: Jawaharlal Nehru University, Ministry of Education, Culture, Sports, Science and Technology