Experimental Evidence on Returns to Capital and Access to Finance in Mexico

creativeworkseries.issn 1564-698X McKenzie, David Woodruff, Christopher 2012-03-30T07:12:37Z 2012-03-30T07:12:37Z 2008-12-01
dc.description.abstract A strong theoretical argument for focusing on access to finance is that financial market imperfections can result in large inefficiencies, as firms with productive investment opportunities underinvest. Lack of access to finance is a frequent complaint of microenterprises, which account for a large share of employment in developing countries. However, assessing the extent to which a lack of capital affects their business profits is complicated by the fact that business investment is likely to be correlated with a host of unmeasured characteristics of the owner and firm, such as entrepreneurial ability and demand shocks. In a randomized experiment that gave cash and in-kind grants to small retail firms, providing an exogenous shock to capital, the shock generated large increases in profits, with the effects concentrated among firms that were more financially constrained. The estimated return to capital was at least 20–33 percent a month—three to five times higher than market interest rates. en
dc.identifier.citation World Bank Economic Review
dc.identifier.issn 1564-698X
dc.publisher World Bank
dc.relation.ispartofseries World Bank Economic Review
dc.rights CC BY-NC-ND 3.0 IGO
dc.rights.holder World Bank
dc.subject access to loans
dc.subject developing countries
dc.subject financial institutions
dc.subject financial market
dc.subject investment opportunities
dc.subject market interest rates
dc.subject microenterprises
dc.subject productive investment
dc.subject return
dc.subject returns
dc.title Experimental Evidence on Returns to Capital and Access to Finance in Mexico en
dc.type Journal Article en
dc.type Article de journal fr
dc.type Artículo de revista es
dspace.entity.type Publication
dspace.entity.type Publication
okr.crosscuttingsolutionarea Jobs
okr.doctype Journal Article
okr.globalpractice Macroeconomics and Fiscal Management
okr.globalpractice Social Protection and Labor
okr.globalpractice Finance and Markets
okr.globalpractice Transport and ICT
okr.globalpractice Trade and Competitiveness 3
okr.language.supported en
okr.pagenumber 457
okr.pagenumber 482
okr.pdfurl wber_22_3_457.pdf en
okr.peerreview Academic Peer Review
okr.region.administrative Latin America & Caribbean Mexico
okr.topic Finance and Financial Sector Development :: Debt Markets
okr.topic Finance and Financial Sector Development :: Access to Finance
okr.topic Finance and Financial Sector Development :: Microfinance
okr.topic Economic Theory and Research
okr.topic Banks and Banking Reform
okr.topic Macroeconomics and Economic Growth :: Investment and Investment Climate
okr.topic Private Sector Development :: E-Business
okr.topic Social Protections and Labor :: Labor Policies
okr.volume 22
relation.isAuthorOfPublication 148d6d6d-76e5-5d6f-9af9-98313e30551f
relation.isJournalIssueOfPublication 209ea377-1596-4a5d-911e-b0f76aec7c05
relation.isJournalOfPublication c41eae2f-cf94-449d-86b7-f062aebe893f
relation.isJournalVolumeOfPublication 4c8baec9-4fd4-4228-8add-184b554e4a53
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