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dc.contributor.authorWellalage, Nirosha Hewaen_NZ
dc.contributor.authorLocke, Stuarten_NZ
dc.contributor.authorSamujh, Helenen_NZ
dc.date.accessioned2023-01-13T00:02:21Z
dc.date.available2023-01-13T00:02:21Z
dc.date.issued2020-06-01en_NZ
dc.identifier.issn0921-898Xen_NZ
dc.identifier.urihttps://hdl.handle.net/10289/15425
dc.description.abstractThis study investigates the effect of paying bribes on access to credit for small, and medium enterprises (SMEs). Bribery is variously portrayed in the literature as greasing the wheel (helping) or sand in the wheel (impeding) when applying for credit leaves the issue unresolved. Using The World Bank Enterprise Surveys of SME data, an answer for India emerges using an instrumental variable probit model. SME bribery is detrimental to accessing credit and more so for firms that have been in business for many years and operating on a small scale. There are supply and demand side forces involved, culminating in differing size effect reactions. From a supply side perspective, when corruption is high, financial institutions find it harder to control borrower risk and recover loans. In that case, financial institutions reduce their lending to SMEs, which mostly belong to a high-risk category. Unlike large firms, SMEs paying bribes to grease the wheel are drawn to the informal sector, avoiding attention from officials. Where SMEs pay bribes in the formal sector it is noticed and is likely to increase the probability that other parties will also demand payments. The demand side argument regards bribes as a tax, increasing the cost of loans to the SMEs. Consequently, making significant bribes decreases these SMEs’ profitability. Less profitable SMEs may not obtain access to credit. From a policy perspective, anti-corruption measures are vital for developing SMEs. Generalising these findings to other emerging economies suggests potentially significant welfare gains.
dc.format.mimetypeapplication/pdf
dc.language.isoenen_NZ
dc.publisherSPRINGERen_NZ
dc.rightsThis is an author’s accepted version of an article published in the journal: Small Business Economics. © 2020 Springer
dc.subjectSocial Sciencesen_NZ
dc.subjectBusinessen_NZ
dc.subjectEconomicsen_NZ
dc.subjectManagementen_NZ
dc.subjectBusiness & Economicsen_NZ
dc.subjectCorruptionen_NZ
dc.subjectBribesen_NZ
dc.subjectSMEen_NZ
dc.subjectCredit accessen_NZ
dc.subjectIndiaen_NZ
dc.subjectIV probit regressionen_NZ
dc.subjectEndogeneityen_NZ
dc.subjectFinancial constraintsen_NZ
dc.subjectProfit reinvestmenten_NZ
dc.subjectBusiness ownersen_NZ
dc.subjectCorruptionen_NZ
dc.subjectGrowthen_NZ
dc.subjectWomenen_NZ
dc.subjectDeterminantsen_NZ
dc.subjectPerformanceen_NZ
dc.subjectCompetitionen_NZ
dc.subjectGenderen_NZ
dc.titleFirm bribery and credit access: Evidence from Indian SMEsen_NZ
dc.typeJournal Article
dc.identifier.doi10.1007/s11187-019-00161-wen_NZ
dc.relation.isPartOfSMALL BUSINESS ECONOMICSen_NZ
pubs.begin-page283
pubs.elements-id237354
pubs.end-page304
pubs.issue1en_NZ
pubs.publication-statusPublisheden_NZ
pubs.volume55en_NZ
dc.identifier.eissn1573-0913en_NZ


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