Access to Credit and the Size of the Formal Sector.

This paper studies the link between credit conditions and formalization in Brazil. Over the last decade, Brazil has experienced a large increase in the level of credit and the rate of formalization, these changes are linked to a reduction in the cost of credit and policy reforms oriented toward impr...

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Publicado en:Economía Vol. 16; no. 2; pp. 143 - 200
Autor principal: D'ERASMO, PABLO N.
Formato: Artículo
Publicado: London School of Economics & Political Science Spring2016
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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        atl: Access to Credit and the Size of the Formal Sector.
      aug:
        au: D'ERASMO, PABLO N.
        affil: Federal Reserve Bank of Philadelphia
      su:
        Brazil
        Industrial productivity
        Commercial credit
        Regulatory reform
        Corporate debt
        Intermediation (Finance)
        Financial ratios
        Business size
        Commercial policy
      sug:
        subj:
          Industrial productivity
          Brazil
          Administration of General Economic Programs
          Miscellaneous Intermediation
          Other Activities Related to Credit Intermediation
          All Other Nondepository Credit Intermediation
          All other non-depository credit intermediation
          Commercial credit
          Regulatory reform
          Corporate debt
          Intermediation (Finance)
          Financial ratios
          Business size
          Commercial policy
      keyword:
        Aggregate productivity
        Financial structure
        Informal sector
        Aggregate productivity
        Financial structure
        Informal sector
      ab: This paper studies the link between credit conditions and formalization in Brazil. Over the last decade, Brazil has experienced a large increase in the level of credit and the rate of formalization, these changes are linked to a reduction in the cost of credit and policy reforms oriented toward improving the efficiency of the financial sector. The paper develops a model with endogenous formal and informal sectors to evaluate how much of the change in corporate credit and the size of the formal sector can be attributed to a reduction in financial intermediation costs. The model predicts that the reduction in intermediation costs generates an increase in the credit-to-output ratio and the fraction of formal workers, in line with the data. By affecting the allocation of capital and the entry and exit rates, the change in credit conditions has important implications for the firm size distribution and aggregate productivity.
      pubtype: Academic Journal
      doctype: Article
      src: R
    language: English
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