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Do firms want to borrow more? : testing credit constraints using a directed lending program

Author: Abhijit V Banerjee; Esther Duflo; Massachusetts Institute of Technology. Department of Economics.
Publisher: Cambridge, Mass. : Massachusetts Institute of Technology, Dept. of Economics, [2002]
Series: Working paper (Massachusetts Institute of Technology. Department of Economics), no. 02-25.
Edition/Format:   Print book : EnglishView all editions and formats
Summary:
We begin the paper by laying out a simple methodology that allows us to determine whether firms are credit constrained, based on how they react to changes in directed lending programs. The basic idea is that while both constrained and unconstrained firms may be willing to absorb all the directed credit that they can get (because it may be cheaper than other sources of credit), constrained firms will use it to expand  Read more...
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Material Type: Internet resource
Document Type: Book, Internet Resource
All Authors / Contributors: Abhijit V Banerjee; Esther Duflo; Massachusetts Institute of Technology. Department of Economics.
OCLC Number: 58801991
Notes: "May 2002."
Description: 1, 30, [10] pages : illustrations ; 28 cm.
Series Title: Working paper (Massachusetts Institute of Technology. Department of Economics), no. 02-25.
Responsibility: Abhijit Banerjee, Esther Duflo.

Abstract:

We begin the paper by laying out a simple methodology that allows us to determine whether firms are credit constrained, based on how they react to changes in directed lending programs. The basic idea is that while both constrained and unconstrained firms may be willing to absorb all the directed credit that they can get (because it may be cheaper than other sources of credit), constrained firms will use it to expand production, while unconstrained firms will primarily use it as a substitute for other borrowing. We then apply this methodology to firms in India that became eligible for directed credit as a result of a policy change in 1998. Using firms that were already getting this kind of credit before 1998 to control for time trends, we show that there is no evidence that directed credit is being used as a substitute for other forms of credit. Instead the credit was used to finance more production - there was significant acceleration in the rate of growth of sales and profits for these firms. We conclude that many of the firms must have been severely credit constrained. Keywords: Banking, Credit Constraints, India. JEL Classifications: O16, G2.

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Primary Entity<\/h3>\n
<http:\/\/www.worldcat.org\/oclc\/58801991<\/a>> # Do firms want to borrow more? : testing credit constraints using a directed lending program<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Book<\/a>, schema:CreativeWork<\/a> ;\u00A0\u00A0\u00A0\nlibrary:oclcnum<\/a> \"58801991<\/span>\" ;\u00A0\u00A0\u00A0\nlibrary:placeOfPublication<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Place\/cambridge_mass<\/a>> ; # Cambridge, Mass.<\/span>\n\u00A0\u00A0\u00A0\nlibrary:placeOfPublication<\/a> <http:\/\/id.loc.gov\/vocabulary\/countries\/enk<\/a>> ;\u00A0\u00A0\u00A0\nschema:about<\/a> <http:\/\/id.worldcat.org\/fast\/826704<\/a>> ; # Bank loans<\/span>\n\u00A0\u00A0\u00A0\nschema:about<\/a> <http:\/\/id.worldcat.org\/fast\/869463<\/a>> ; # Commercial credit<\/span>\n\u00A0\u00A0\u00A0\nschema:about<\/a> <http:\/\/id.worldcat.org\/fast\/1210276<\/a>> ; # India.<\/span>\n\u00A0\u00A0\u00A0\nschema:about<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Topic\/commercial_credit_india<\/a>> ; # Commercial credit--India<\/span>\n\u00A0\u00A0\u00A0\nschema:about<\/a> <http:\/\/id.worldcat.org\/fast\/882577<\/a>> ; # Credit control<\/span>\n\u00A0\u00A0\u00A0\nschema:about<\/a> <http:\/\/id.loc.gov\/authorities\/subjects\/sh2009116656<\/a>> ; # Bank loans--India<\/span>\n\u00A0\u00A0\u00A0\nschema:about<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Topic\/credit_control_india<\/a>> ; # Credit control--India<\/span>\n\u00A0\u00A0\u00A0\nschema:bookFormat<\/a> bgn:PrintBook<\/a> ;\u00A0\u00A0\u00A0\nschema:contributor<\/a> <http:\/\/viaf.org\/viaf\/147839287<\/a>> ; # Massachusetts Institute of Technology. Department of Economics.<\/span>\n\u00A0\u00A0\u00A0\nschema:contributor<\/a> <http:\/\/viaf.org\/viaf\/74926739<\/a>> ; # Esther Duflo<\/span>\n\u00A0\u00A0\u00A0\nschema:creator<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Person\/banerjee_abhijit_v_1961<\/a>> ; # Abhijit V. Banerjee<\/span>\n\u00A0\u00A0\u00A0\nschema:datePublished<\/a> \"2002<\/span>\" ;\u00A0\u00A0\u00A0\nschema:description<\/a> \"We begin the paper by laying out a simple methodology that allows us to determine whether firms are credit constrained, based on how they react to changes in directed lending programs. The basic idea is that while both constrained and unconstrained firms may be willing to absorb all the directed credit that they can get (because it may be cheaper than other sources of credit), constrained firms will use it to expand production, while unconstrained firms will primarily use it as a substitute for other borrowing. We then apply this methodology to firms in India that became eligible for directed credit as a result of a policy change in 1998. Using firms that were already getting this kind of credit before 1998 to control for time trends, we show that there is no evidence that directed credit is being used as a substitute for other forms of credit. Instead the credit was used to finance more production - there was significant acceleration in the rate of growth of sales and profits for these firms. We conclude that many of the firms must have been severely credit constrained. Keywords: Banking, Credit Constraints, India. JEL Classifications: O16, G2.<\/span>\"@en<\/a> ;\u00A0\u00A0\u00A0\nschema:exampleOfWork<\/a> <http:\/\/worldcat.org\/entity\/work\/id\/17084611<\/a>> ;\u00A0\u00A0\u00A0\nschema:inLanguage<\/a> \"en<\/span>\" ;\u00A0\u00A0\u00A0\nschema:isPartOf<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Series\/working_paper_series_massachusetts_institute_of_technology_dept_of_economics<\/a>> ; # Working paper series \/ Massachusetts Institute of Technology, Dept. of Economics ;<\/span>\n\u00A0\u00A0\u00A0\nschema:isPartOf<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Series\/working_paper_massachusetts_institute_of_technology_department_of_economics<\/a>> ; # Working paper (Massachusetts Institute of Technology. Department of Economics) ;<\/span>\n\u00A0\u00A0\u00A0\nschema:name<\/a> \"Do firms want to borrow more? : testing credit constraints using a directed lending program<\/span>\"@en<\/a> ;\u00A0\u00A0\u00A0\nschema:productID<\/a> \"58801991<\/span>\" ;\u00A0\u00A0\u00A0\nschema:publication<\/a> <http:\/\/www.worldcat.org\/title\/-\/oclc\/58801991#PublicationEvent\/cambridge_mass_massachusetts_institute_of_technology_dept_of_economics_2002<\/a>> ;\u00A0\u00A0\u00A0\nschema:publisher<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Agent\/massachusetts_institute_of_technology_dept_of_economics<\/a>> ; # Massachusetts Institute of Technology, Dept. of Economics<\/span>\n\u00A0\u00A0\u00A0\nschema:url<\/a> <http:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=316587<\/a>> ;\u00A0\u00A0\u00A0\nwdrs:describedby<\/a> <http:\/\/www.worldcat.org\/title\/-\/oclc\/58801991<\/a>> ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n\n

Related Entities<\/h3>\n
<http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Agent\/massachusetts_institute_of_technology_dept_of_economics<\/a>> # Massachusetts Institute of Technology, Dept. of Economics<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nbgn:Agent<\/a> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Massachusetts Institute of Technology, Dept. of Economics<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Person\/banerjee_abhijit_v_1961<\/a>> # Abhijit V. Banerjee<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Person<\/a> ;\u00A0\u00A0\u00A0\nschema:birthDate<\/a> \"1961<\/span>\" ;\u00A0\u00A0\u00A0\nschema:familyName<\/a> \"Banerjee<\/span>\" ;\u00A0\u00A0\u00A0\nschema:givenName<\/a> \"Abhijit V.<\/span>\" ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Abhijit V. Banerjee<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Place\/cambridge_mass<\/a>> # Cambridge, Mass.<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Place<\/a> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Cambridge, Mass.<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Series\/working_paper_massachusetts_institute_of_technology_department_of_economics<\/a>> # Working paper (Massachusetts Institute of Technology. Department of Economics) ;<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nbgn:PublicationSeries<\/a> ;\u00A0\u00A0\u00A0\nschema:hasPart<\/a> <http:\/\/www.worldcat.org\/oclc\/58801991<\/a>> ; # Do firms want to borrow more? : testing credit constraints using a directed lending program<\/span>\n\u00A0\u00A0\u00A0\nschema:name<\/a> \"Working paper (Massachusetts Institute of Technology. Department of Economics) ;<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Series\/working_paper_series_massachusetts_institute_of_technology_dept_of_economics<\/a>> # Working paper series \/ Massachusetts Institute of Technology, Dept. of Economics ;<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nbgn:PublicationSeries<\/a> ;\u00A0\u00A0\u00A0\nschema:hasPart<\/a> <http:\/\/www.worldcat.org\/oclc\/58801991<\/a>> ; # Do firms want to borrow more? : testing credit constraints using a directed lending program<\/span>\n\u00A0\u00A0\u00A0\nschema:name<\/a> \"Working paper series \/ Massachusetts Institute of Technology, Dept. of Economics ;<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Topic\/commercial_credit_india<\/a>> # Commercial credit--India<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Intangible<\/a> ;\u00A0\u00A0\u00A0\nschema:hasPart<\/a> <http:\/\/id.loc.gov\/authorities\/subjects\/sh86005993<\/a>> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Commercial credit--India<\/span>\"@en<\/a> ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Topic\/credit_control_india<\/a>> # Credit control--India<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Intangible<\/a> ;\u00A0\u00A0\u00A0\nschema:hasPart<\/a> <http:\/\/id.loc.gov\/authorities\/subjects\/sh85033867<\/a>> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Credit control--India<\/span>\"@en<\/a> ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/id.loc.gov\/authorities\/subjects\/sh2009116656<\/a>> # Bank loans--India<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Intangible<\/a> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Bank loans--India<\/span>\"@en<\/a> ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/id.loc.gov\/vocabulary\/countries\/enk<\/a>>\u00A0\u00A0\u00A0\u00A0a \nschema:Place<\/a> ;\u00A0\u00A0\u00A0\ndcterms:identifier<\/a> \"enk<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/id.worldcat.org\/fast\/1210276<\/a>> # India.<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Place<\/a> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"India.<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/id.worldcat.org\/fast\/826704<\/a>> # Bank loans<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Intangible<\/a> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Bank loans<\/span>\"@en<\/a> ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/id.worldcat.org\/fast\/869463<\/a>> # Commercial credit<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Intangible<\/a> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Commercial credit<\/span>\"@en<\/a> ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/id.worldcat.org\/fast\/882577<\/a>> # Credit control<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Intangible<\/a> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Credit control<\/span>\"@en<\/a> ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=316587<\/a>>\u00A0\u00A0\u00A0\nrdfs:comment<\/a> \"To download paper, go to the bottom of the abstract page and click the button: download document.<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/viaf.org\/viaf\/147839287<\/a>> # Massachusetts Institute of Technology. Department of Economics.<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Organization<\/a> ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Massachusetts Institute of Technology. Department of Economics.<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/viaf.org\/viaf\/74926739<\/a>> # Esther Duflo<\/span>\n\u00A0\u00A0\u00A0\u00A0a \nschema:Person<\/a> ;\u00A0\u00A0\u00A0\nschema:birthDate<\/a> \"1972<\/span>\" ;\u00A0\u00A0\u00A0\nschema:familyName<\/a> \"Duflo<\/span>\" ;\u00A0\u00A0\u00A0\nschema:givenName<\/a> \"Esther<\/span>\" ;\u00A0\u00A0\u00A0\nschema:name<\/a> \"Esther Duflo<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/www.worldcat.org\/title\/-\/oclc\/58801991<\/a>>\u00A0\u00A0\u00A0\u00A0a \ngenont:InformationResource<\/a>, genont:ContentTypeGenericResource<\/a> ;\u00A0\u00A0\u00A0\nschema:about<\/a> <http:\/\/www.worldcat.org\/oclc\/58801991<\/a>> ; # Do firms want to borrow more? : testing credit constraints using a directed lending program<\/span>\n\u00A0\u00A0\u00A0\nschema:dateModified<\/a> \"2019-10-19<\/span>\" ;\u00A0\u00A0\u00A0\nvoid:inDataset<\/a> <http:\/\/purl.oclc.org\/dataset\/WorldCat<\/a>> ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n
<http:\/\/www.worldcat.org\/title\/-\/oclc\/58801991#PublicationEvent\/cambridge_mass_massachusetts_institute_of_technology_dept_of_economics_2002<\/a>>\u00A0\u00A0\u00A0\u00A0a \nschema:PublicationEvent<\/a> ;\u00A0\u00A0\u00A0\nschema:location<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Place\/cambridge_mass<\/a>> ; # Cambridge, Mass.<\/span>\n\u00A0\u00A0\u00A0\nschema:organizer<\/a> <http:\/\/experiment.worldcat.org\/entity\/work\/data\/17084611#Agent\/massachusetts_institute_of_technology_dept_of_economics<\/a>> ; # Massachusetts Institute of Technology, Dept. of Economics<\/span>\n\u00A0\u00A0\u00A0\nschema:startDate<\/a> \"2002<\/span>\" ;\u00A0\u00A0\u00A0\u00A0.\n\n\n<\/div>\n\n

Content-negotiable representations<\/p>\n