Access to Finance in a Cros-Country Context

__Abstract__ Access to finance is one of the most serious obstacles faced by corporations. Financing constraints lead to large opportunity costs and negative consequences for economic growth, productivity, and welfare. In three studies, this dissertation examines mechanisms that can help to reduce financing constraints of companies. First study investigates the costs and benefits of relationship lending. Meta-analytic methodology reveals that relationship lending is generally beneficial for companies, but lenders and companies face trade-offs in lending relationships and lending outcomes. The results document positive effect of bank competition on borrower benefits. Second study develops a more complete conceptual framework of credit constraints. The new framework describes the occurrence of credit constraints in sequential, conditional stages. The results show that credit constraints vary with the bank lending environment beyond firm risk. Bank lending standards are strongly related to credit constraints, but the direction and the magnitude of the effect depend on the conditional stage. Third study examines the role of credit information sharing systems. The analysis documents dichotomous effects of information scope (depth of information) and scale (information coverage). While the information scope is associated with lower financing constraints, the information scale is associated with higher financing constraints, suggesting that accurate and deep information, rather than the coverage alone, contribute to lower financing constraints. The empirical results from the three studies demonstrate that promising new venues exist for increasing firms’ access to finance

Impact of financial inclusion in low- and middle-income countries: a systematic review of reviews

Financial inclusion programmes seek to increase access to financial services such as credit, savings, insurance and money transfers and so allow poor and low-income households in low- and middle-income countries to enhance their welfare, grasp opportunities, mitigate shocks, and ultimately escape poverty. This systematic review of reviews assesses the evidence on economic, social, behavioural and gender-related outcomes from financial inclusion. It collects and appraises all of the existing meta-studies - that is systematic reviews and meta-analyses - of the impact of financial inclusion. The authors first analyse the strength of the methods used in those meta-studies, then synthesise the findings from those that are of a sufficient quality, and finally, report the implications for policy, programming, practice and further research arising from the evidence. Eleven studies are included in the analysis

The Benefits of Relationship Lending in a Cross-Country Context: A Meta-Analysis

Relationship lending may create benefits for borrowers by reducing information asymmetries. However, empirical evidence is mixed. We conduct a meta-analysis to summarize and explain the heterogeneity in the results in the literature using hand-collected information from 101 studies in the United States, Europe, Asia, and Latin America from 1970 to 2010. We find that strong relationships are generally beneficial for borrowers, but lending outcomes differ across the relationships’ dimensions. Long-lasting, exclusive, and synergy-creating bank relationships are associated with higher credit volume and lower loan rates. These benefits are more likely in the United States and in countries where bank competition is high. They are not related to the importance of small and medium-sized enterprises in an economy, suggesting that prevalence of relationship lending does not necessarily come along with borrower benefits. Our inferences are robust when we control for observed systematic heterogeneity in the original studies and hold in a bootstrapping analysis