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Applied Micro Workshop – Ádám Szeidl, “Direct and Indirect Effects of Financial Access on SMEs”

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Jing Cai and Ádám Szeidl: “Direct and Indirect Effects of Financial Access on SMEs” We measure the direct and indirect effects of access to finance using a randomized experiment with 3,100 firms in 78 local markets in China, which created variation in firms' access to a new loan product both within and across markets. Our estimates imply that: (1) Financial access has large positive direct effects. Providing access to a firm increases its revenue by 9 percent, and also significantly increases profits, employment, the number of clients, the use of trade credit, and various proxies for product/service quality. The new loan does not crowd out existing loans. (2) Financial access has large negative indirect effects. Providing access to all of a firm’s competitors in the local market reduces its revenue by 7 percent, and also significantly reduces profits, employment, the number of clients and other performance measures. (3) In a model matched to the data in which the indirect effect reflects business stealing, treating all firms in a market would generate—despite nearly offsetting direct and indirect effects on firms—sizable welfare gains to consumers who benefit from competition.

Event details
What
  • Presentation
When Apr 02, 2019
from 16:00 to 17:30
Where briq, Seminar Room 9/1.1, Schaumburg-Lippe-Straße 9
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