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on Microfinance |
| By: | Walter Cuba (Central Reserve Bank of Peru); Eduardo Diaz (Central Reserve Bank of Peru) |
| Abstract: | We review the initial effects of the imposition of caps on interest rates in Peru's financial system. We developed a methodology that allows us to quantify the potential exclusion of clients. We found that financial institutions excluded close to 243 thousand clients from the financial system. Regarding consumer loans, the exclusion ratio was higher among debtors outside the capital city, under the age of 25. Additionally, the effect was smaller for married debtors. In the case of small and micro-business loans, the effect was higher for natural persons, the commerce sector, and firms in the capital city. In summary, the effects induced by caps on interest rates are concentrated among people with lower incomes and those with vulnerable firms. Additionally, these debtors typically had the highest interest rates and were the main clients of non-banking financial institutions. |
| Keywords: | Cap on interest rate; credit market; exclusion |
| JEL: | G21 G23 G28 K20 |
| Date: | 2023–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp02-2023&r=mfd |
| By: | Olayinka Oyekola (Department of Economics, University of Exeter); Samuel Odewunmi (Department of Economics, University of Exeter) |
| Abstract: | Does the level of societal secrecy aggravate or alleviate access to finance? We explore this question for over 50, 000 firms in around 40, predominantly developing, countries, from 2006 to 2015. We find a strong positive relationship between cultural orientation towards secrecy in a country and financial constraints faced by its firms. Our results are robust to several considerations and emphasise the adverse consequence of societal secrecy for perpetuating financing obstacles for firms. |
| Keywords: | financial constraints, access to credit, societal secrecy, national culture, firm-level data |
| JEL: | G20 G30 O16 Z1 |
| Date: | 2023–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2303&r=mfd |
| By: | Gil, Eunsun (Korea Institute for Industrial Economics and Trade) |
| Abstract: | The Korean government is considering providing a fourth round of disaster relief funding to support small businesses hard-hit by the prolonged social distancing measures implemented to contain the spread of COVID-19. However, determining which businesses should benefit from this support is quite tricky. Legal business entities such as microenterprises and privately-owned companies are not the same as struggling, self-employed small businesses. During the second and third rounds of support, only privately-owned microenterprises were eligible for relief. The amount of financial support available varied depending on whether businesses were ordered to limit the number of customers, had restrictions placed on business hours, or suffered losses in revenue. Small business establishments categorized neither as microenterprises nor as privately-owned companies have been excluded from receiving support, regardless of the economic hardship they face. Moreover, privately-owned microenterprises (many of which are far from being small businesses with narrow operating margins) are not excluded from receiving support. This paper explores proposals for policy that would address these issues to ensure greater equity in COVID-19 disaster relief. |
| Keywords: | COVID-19; Korea; subsidies; subsidy policy; support policy; small businesses; SMEs; small and medium-sized enterprises; policy support; disaster relief; disaster relief policy; stimulus policy; disaster aid; COVID-19 relief; bailouts; credits; loan guarantees; government loans |
| JEL: | H12 H20 H25 H81 H84 L50 L53 |
| Date: | 2021–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kietia:2021_002&r=mfd |