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Access to Finance

This topic also includes work on use of trade credits.

Financial markets and institutions play a crucial role in reallocating financial resources to their most productive usage, mobilizing the funds from firms/individuals with excess funds and channeling them to firms with good growth prospects. Without access to external finance, firms cannot realize their full growth potential, which results in slower economic growth for a country as a whole. If firms find it difficult to raise external finance their growth is limited to the levels that they can finance internally or by relying on often prohibitively expensive informal networks. Inability to obtain sufficient funds, or, in other words, financing constraints, are often cited as one of the main constraints on firms’ operations and growth, especially so in countries with weak financial markets and institutions. We aim to study the broad range of issues related to access to finance in countries on different level of financial development.

This research is focusing on the following topics:

  • Does financial development allow for reallocation of resources to their most productive uses?
  • How can firms finance themselves in countries with different level of financial development, financial structure and institutional environment?
  • How do financing constraints affect firms’ growth and their investment behavior?
  • What are the consequences of financial underdevelopment and how do firms endogenously adjust to their environment?
  • What type of firms are the most financially constrained and what policies could help to alleviate these constraints?
  • How important is trade credit as a source of financing in countries with less developed banking and financial systems?
  • What is the interplay between legal systems, politics and financial development?

We have a related project focusing on the access to finance by SME firms.


  • Asli Demirguc-Kunt
  • Leora Klapper




WPS6020Does a picture paint a thousand words ? evidence from a microcredit marketing experimentGine, Xavier; Mansuri, Ghazala; Picon, Mario2012/04
WPS6036Financing of firms in developing countries : lessons from researchAyyagari, Meghana; Demirguc-Kunt, Asli; Maksimovic, Vojislav2012/04
WPS5839Remittances and financial inclusion : evidence from El SalvadorAnzoategui, Diego; Demirguc-Kunt, Asli; Martinez Peria, Maria Soledad2011/10
WPS5790Foreign direct investment under weak rule of law : theory and evidence from ChinaWang, Xiaozu; Xu, Lixin Colin; Zhu, Tian2011/09
WPS5806Is small beautiful ? financial structure, size and access to financeBeck, Thorsten; Demirguc-Kunt, Asli; Singer, Dorothe2011/09

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