Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/179212 
Year of Publication: 
2017
Series/Report no.: 
ADBI Working Paper No. 756
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
In this paper, we aim to assess how a specific socio-institutional environment, identified according to the level of corruption, may affect the access to credit for micro, small, and medium-sized enterprises (MSMEs). Using a sample of 68,115 observations - drawn from the ECB-SAFE survey - related to MSMEs chartered in 11 euro area countries during the period 2009-2014, we investigate whether the level of corruption affects their demand for bank loans. Overall, we find that the degree of corruption seems to play a role in the applications for bank loans when small firms are under investigation. Interestingly, results highlight that small businesses chartered in highly corrupt countries face a greater probability of self-restraint regarding their loan applications (about 7.4%) than small firms located in low-corruption economies (around 6%). The results are robust to various model specifications and econometric methodologies. Our findings suggest that anti-corruption policies and measures enhancing transparency in the economy may be crucial in reducing the negative spillovers generated by a low-quality institutional environment on the access to credit by small firms.
Subjects: 
credit access
bank loans
MSMEs
corruption
JEL: 
G20
G21
G30
G32
D73
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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