Indirect Effects of Access to Finance
American Economic Review · 2024 · Volume 114 · Issue 8
Abstract
We created experimental variation across markets in China in the share of firms having access to a new loan product. Access to finance had a large positive direct effect on the performance of treated firms but a similar-sized negative indirect effect on that of firms with treated competitors, leading to nondetectable gains in producer surplus. Access to finance had a positive direct effect on business quality and consumer satisfaction and a negative effect on price, which were not offset by indirect effects, implying net gains in consumer surplus. We document other indirect effects and combine effects in a welfare evaluation.
Keywords
Firm Behavior: Empirical Analysis, Banks, Depository Institutions, Micro Finance Institutions, Mortgages, Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill, Retail and Wholesale Trade, e-Commerce, Economic Development: Financial Markets, Saving and Capital Investment, Corporate Finance and Governance, Socialist Enterprises and Their Transitions, Socialist Institutions and Their Transitions: Financial Economics
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