American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Indirect Effects of Access to Finance
American Economic Review
vol. 114,
no. 8, August 2024
(pp. 2308–51)
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.Citation
Cai, Jing, and Adam Szeidl. 2024. "Indirect Effects of Access to Finance." American Economic Review, 114 (8): 2308–51. DOI: 10.1257/aer.20220711Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L81 Retail and Wholesale Trade; e-Commerce
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- P31 Socialist Enterprises and Their Transitions
- P34 Socialist Institutions and Their Transitions: Financial Economics