Credit Constraints and Investment Behavior in Mexico’s Rural Economy

Love, Inessa ; Sanchez, Susana M.

关键词: ACCESS TO CAPITAL;    ACCESS TO CREDIT;    ACCESS TO EXTERNAL FINANCE;    ACCESS TO FINANCE;    ACCESS TO FINANCIAL SERVICES;   

DOI  :  10.1596/1813-9450-5014
RP-ID  :  WPS5014

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper uses two recently completedsurveys of individual entrepreneurs (farmers andmicroentrepreneurs) and registered enterprises (agriculturaland nonagricultural) operating in Mexico s rural sector toprovide new evidence about the factors influencing theincidence of credit constraints and investment behavior. Tomeasure the incidence of credit constraints, the authors useself-reported information on whether economic agents have ademand for loans, separating formal and informal markets.They define credit constraints as a situation where ruralagents report an unsatisfied demand for loans (formal orinformal), which originates from rural agents havingprojects that are too risky or from impediments hinderingthe ability of rural agents and lenders to reduceinformation asymmetries. The authors find that theself-reported demand for loans is low. Nevertheless, theincidence of credit constraints is pervasive, especiallyamong individual entrepreneurs. The low use of loans hasconsequences for the amount of investments that occur in therural economy, posing a major obstacle to Mexico sconvergence towards its NAFTA partners. The empiricalanalysis, which includes proxies of business prospects andcreditworthiness, shows that improving the availability ofloans to credit constrained agents would increase the numberof agents making investments and their investment to capital ratios.