The Excess Burden of Collateral

27 November 2019

Farshad Ravasan
View Journal Article / Working Paper

Using a novel data set on lending technique of banks in threeMENA economies and matching data on the location of firms and bank branches, I study the impact of local lending environment that prevails in the vicinity of each firm. I find that firms face tighter credit constraint when they are located in areas in which banks that view themselves as collateral lender have a stronger presence. I find this negative effect is stronger for innovative firms.