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Credit Rationing in Informal Markets: The Case of Small Firms in India
2011
Social Science Research Network
Using a unique dataset combining survey responses with panel data of reported financial activities of a sample of small and medium enterprises in India, the present study examines availability of different types of relationship-based credit, including credit driven by business relationships and social relationships. We find evidence of rationing for each type of credit. A high interest rate necessary to clear the market for loans creates a "debt overhang" for the smaller borrowing firms who
doi:10.2139/ssrn.1786139
fatcat:tm3badzfxzdx3lgwp4747liu5i