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Credit Constraints (credit + constraint)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	94%

Selected Abstracts

CREDIT CONSTRAINTS IN THE MARKET FOR CONSUMER DURABLES: EVIDENCE FROM MICRO DATA ON CAR LOANS,

INTERNATIONAL ECONOMIC REVIEW, Issue 2 2008
Orazio P. Attanasio
We investigate the significance of borrowing constraints in the market for consumer loans. Using data from the Consumer Expenditure Survey on auto loan contracts we estimate the elasticities of loan demand with respect to interest rate and maturity. We find that, with the exception of high income households, consumers are very responsive to maturity and less responsive to interest rate changes. Both elasticities vary with household income, with the maturity elasticity decreasing and the interest rate elasticity increasing with income. We argue that these results are consistent with the presence of binding credit constraints in the auto loan market. [source]

Does nonagricultural labor relax farmers' credit constraints?

AGRICULTURAL ECONOMICS, Issue 2 2009
Evidence from longitudinal data for Vietnam
Rural labor markets; Linkages; Credit constraints; Vietnam Abstract We examine the relationship between participation in nonagricultural labor activities and farming production decisions, focusing on the use of inputs. Using longitudinal data for Vietnam from 1993 to 1998, we find that households engaged in nonagricultural labor spend significantly more on seeds, services, hired labor, and livestock inputs. This is consistent with the hypothesis that nonagricultural labor income relaxes credit constraints to farming. [source]

Rural nonfarm activities and agricultural crop production in Nigeria

AGRICULTURAL ECONOMICS, Issue 2 2009
Gbemisola Oseni
Nigeria; Rural nonfarm activities; Agricultural crop expenditures; Credit constraints Abstract Although most rural households are involved in the farm sector, the nonfarm sector has grown significantly in recent decades, and its role in rural development has become increasingly important. This article examines the effect of participation in nonfarm activities on crop expenses of farm households in Nigeria. The relationship is modeled using a nonseparable agricultural household model that suggests that participating in nonfarm activities can relax the credit constraints facing farm households and reduce risk thereby helping households improve farm production and smooth consumption over time. The results show that participation in nonfarm activities by Nigerian farmers has a positive and significant effect on crop expenses and in particular on payments for hired labor and inorganic fertilizers. Separate analysis of the six geopolitical zones in Nigeria indicates that it is in the South-South and South-East zones where nonfarm participation appears to induce more hiring of labor. The results support the hypothesis that nonfarm participation helps relax liquidity constraints but suggests how that liquidity is used is zone-specific. In general, the results also indicate that liquidity is used more to pay for inputs into staple production as opposed to cash crops. [source]

Credit demand in Mozambican manufacturing

JOURNAL OF INTERNATIONAL DEVELOPMENT, Issue 1 2010
Bruce Byiers
Abstract This paper uses two industrial firm surveys to identify the key determinants of credit demand in Mozambican manufacturing. We construct five different measures of being credit constrained and estimate desired debt demand. Besides firm size and ownership structure, we find evidence that general manager education and business association membership are associated with whether a firm is credit constrained or not. Using our preferred measure of credit constraint suggests that around 43 per cent of the firms surveyed are constrained, and these enterprises would almost triple their debt burden if borrowing constraints were relaxed. Copyright © 2009 John Wiley & Sons, Ltd. [source]

LAND PRICE, COLLATERAL AND ECONOMIC GROWTH,

THE JAPANESE ECONOMIC REVIEW, Issue 4 2009
MASAYA SAKURAGAWA
This paper extends Kiyotaki and Moore's (1997) to an endogenous growth model and investigates the dynamic properties of a growing economy with binding credit constraint when land is used not only as an input of production but also as collateral. There exists a balanced growth path in an economy with binding credit constraint. In response to a once and for all productivity shock, the developed model shows the propagation mechanism among output, capital, bank credit and the land price in terms of the growth rate. The model's tractability allows us to derive interesting qualitative and quantitative findings on business cycles. [source]

BEQUEST RECEIPT AND FAMILY SIZE EFFECTS

ECONOMIC INQUIRY, Issue 1 2010
NATHAN D. GRAWE
This article tests the connection between credit constraints and negative family size effects on child earnings using bequest receipt to signal access to credit markets. The dominant economic model of fertility predicts a negative relationship between family size and child achievement. In the model, limits on borrowing create this "quality-quantity trade-off." This article tests for the relevance of credit constraints using Panel Study of Income Dynamics data to compare family size effects across groups defined by bequest receipt. Contrary to the credit constraints explanation, those receiving large bequests exhibit large family size effects, while those not receiving bequests show little to no effect. (JEL J13, D1, I2) [source]

UK Household Debt: A Threat to Growth or Stability?

ECONOMIC OUTLOOK, Issue 1 2005
Article first published online: 2 FEB 200
The liberalisation of credit constraints in the 1970s for UK consumers has had important implications for the housing market and consumer spending. This paper by John Muellbauer1 examines the factors that have driven soaring consumer debt and house price levels; in particular those observed since the mid-1990s. By relying on recent econometric evidence and trends in credit availability, real income per head, nominal and real after tax mortgage rates, measures of perceived risk and broad demographic trends, it also analyses the prospects for house prices, mortgage debt and unsecured debt over the coming years. The outlook is for a ,soft landing' in the housing market and associated declines in the rate of growth of consumer debt, which, although probably not smooth, does suggest the underlying situation is more benign and less crisis-prone than it was in 1988,89. [source]

Booms and Busts: Consumption, House Prices and Expectations

ECONOMICA, Issue 301 2009
ORAZIO P. ATTANASIO
Over much of the past 25 years, house price and consumption growth have been closely synchronized. Three main hypotheses for this have been proposed: increases in house prices raise household wealth and so their consumption; house price growth reduces credit constraints by increasing the collateral available to homeowners; and house prices and consumption are together influenced by common factors. Using microeconomic data, we find that the relationship between house prices and consumption is stronger for younger than older households, contradicting the wealth channel. We suggest that common causality has been the most important factor linking house prices and consumption. [source]

CREDIT CONSTRAINTS IN THE MARKET FOR CONSUMER DURABLES: EVIDENCE FROM MICRO DATA ON CAR LOANS,

The effect of nonfarm income on investment in Bulgarian family farming

AGRICULTURAL ECONOMICS, Issue 2 2009
Tom Hertz
Bulgaria; Nonfarm income; Agricultural investment Abstract This article documents a relationship between nonfarm income (primarily earnings and pensions) and agricultural investment in Bulgaria, specifically, expenditures on working capital (variable inputs such as feed, seed, and herbicides) and investment in livestock. Among those with positive spending on farm inputs, the estimated elasticity of these expenditures with respect to nonfarm income is 0.14. Nonfarm income also has an effect on the number of households that purchase farm animals, with an estimated elasticity of 0.35. The use of nonfarm income for farm investment is consistent with the presence of credit constraints, as is the fact that less than one percent of farmers report outstanding debts for agricultural purposes. Yet many farm households take out large unsecured loans for other purposes, primarily to cover consumption expenditures, implying that credit is available, but that farmers prefer not to use borrowed funds to finance agricultural investment. This would suggest that increases in the availability of agricultural credit may have little effect on farm outcomes, whereas increases in nondebt-financed sources of liquidity, such as subsidies or transfers, may better stimulate investment. [source]

Does nonagricultural labor relax farmers' credit constraints?

Rural nonfarm activities and agricultural crop production in Nigeria

Household Debt and Income Inequality, 1963,2003

JOURNAL OF MONEY, CREDIT AND BANKING, Issue 5 2008
MATTEO IACOVIELLO
income inequality; household debt; credit constraints; incomplete markets I construct an economy with heterogeneous agents that mimics the time-series behavior of the earnings distribution in the United States from 1963 to 2003. Agents face aggregate and idiosyncratic shocks and accumulate real and financial assets. I estimate the shocks that drive the model using data on income inequality, aggregate income, and measures of financial liberalization. I show how the model economy can replicate two empirical facts: the trend and cyclical behavior of household debt and the diverging patterns in consumption and wealth inequality over time. While business cycle fluctuations can account for the short-run changes in household debt, its prolonged rise of the 1980s and the 1990s can be quantitatively explained only by the concurrent increase in income inequality. [source]

Sibling Sex Composition and Educational Outcomes: A Review of Theory and Evidence for the UK

LABOUR, Issue 1 2009
Vikesh Amin
Studies from US data have found mixed results regarding sibling sex composition effects and educational outcomes. Some researchers have found that sisters hurt women's education, others have found the opposite, and some have found no effects. This paper reviews the theoretical foundations for sibling sex composition effects and tests the theories using British data, on a sample of children born between 3 and 9 March 1958, from the National Child Development Survey. Methods from previous studies are replicated and extensions considered for ability, credit constraints, and family size. No sibling sex composition effects are found, but estimation results support the quantity,quality model. [source]

CREDIT CRUNCH AND HOUSEHOLD WELFARE, THE CASE OF THE KOREAN FINANCIAL CRISIS,

THE JAPANESE ECONOMIC REVIEW, Issue 4 2008
SUNG JIN KANG
We examine how the credit crunch in Korea in the late 1990s affected household behaviour and welfare. Using 1996,1998 household panel data, we estimate a consumption Euler equation, augmented by endogenous credit constraints. Korean households coped with the negative shocks of the 1997 credit crunch by reducing consumption of luxury items while maintaining food, education and health related expenditures. Our results show that, in 1997,1998, during the crisis, the probability of facing credit constraints and the resulting expected welfare loss from the binding constraints increased significantly, suggesting the gravity of the credit crunch at the household level. [source]

Financial Liberalization And The Sensitivity Of House Prices To Monetary Policy: Theory And Evidence

THE MANCHESTER SCHOOL, Issue 1 2003
Matteo Iacoviello
We analyse the impact of financial liberalization on the link between monetary policy and house prices. We present a simple model of a small open economy subjectto credit constraints. The model shows that the higher the degree of financial liberalizationis, the stronger is the impact of interest rate shocks on house prices. We then usevector autoregressions to study the role of monetary policy shocks in house price fluctuations in Finland, Sweden and the UK, characterized by financial liberalizationepisodes over the last 20 years. We find that the response of house prices to interestrate surprises is bigger and more persistent in periods characterized by more liberalized financial markets. [source]

R&D INVESTMENT, CREDIT RATIONING AND SAMPLE SELECTION

BULLETIN OF ECONOMIC RESEARCH, Issue 2 2007
Claudio A. Piga
D45; G21; G32; E51 ABSTRACT We study whether R&D-intensive firms are liquidity constrained, by modelling their antecedent decision to apply for credit. This sample selection issue is relevant when studying a borrower,lender relationship, as the same factors can influence the decisions of both parties. We find firms with no or low R&D intensity to be less likely to request extra funds. When they do, we observe a higher probability of being denied credit. Such a relationship is not supported by evidence from the R&D-intensive firms. Thus, our findings lend support to the notion of credit constraints being severe only for a sub-sample of innovative firms. Furthermore, the results suggest that the way in which the R&D activity is organized may differentially affect a firm's probability of being credit constrained. [source]