In particular, it focuses on firms that are around the cut-off line for loan acceptance. These firms are in general very similar in terms of balance sheet and profitability metrics, but some lie slightly above the line and some lie slightly below. The study maps the outcomes for those firms in the year following the loan rejection.
On average, a rejection leads to a 9% fall in assets, and lower investment and employment. The effects are amplified in firms with low liquidity, with such firms seeing a 5.6% fall in investment and a 7.2% fall in employment.