African Knowledge Base(AKB) Platform
Integrated Essential Digital Resources on Africa

Credit-Constrained in Risky Activities? : The Determinants of Capital Stocks of Micro and Small Firms in Western Africa

There are no files associated with this item.
Appears in Collections:
World Bank (WB)

Abstract: Micro and Small Enterprises (MSEs) in developing countries are typically considered to be severely credit constrained. Additionally, high business risks may partly explain why capital stocks of MSEs remain low. This article analyzes the determinants of capital stocks of MSEs in poor economies focusing on credit constraints and risk. The analysis is based on a unique, albeit cross sectional but backward looking, micro data set on MSEs covering the economic capitals of seven West-African countries. The main result is that capital market imperfections indeed seem to explain an important part of the variation in capital stocks in the early lifetime of MSEs. Furthermore, the analyses show that risk plays a key role for capital accumulation. Risk-averse individuals seem to adjust their initially low capital stocks upwards when enterprises grow older. MSEs in risky activities owned by wealthy individuals even seem to over-invest when they start their business and adjust capital stocks downwards subsequently. As other firms simultaneously suffer from capital shortages, such behavior may imply large inefficiencies.
Type: Working Paper
Publications & Research :: Working Paper
Publications & Research
Link: http://hdl.handle.net/10986/26786
Subject: ACCESS TO CAPITAL
ACCESS TO CREDIT
ACCESS TO FINANCE
ACCESS TO FORMAL CREDIT
ACCOUNTS
ACCUMULATION RATE
ADVANCED ECONOMIES
ADVANCED ECONOMY
AGRICULTURAL ECONOMICS
BANK CREDIT
BANK POLICY
BARRIERS TO ENTRY
BIASES
BORROWING
BUSINESS ACTIVITIES
BUSINESS ACTIVITY
BUSINESS ASSOCIATIONS
BUSINESS ECONOMICS
BUSINESS OWNERS
BUSINESS RISK
BUSINESS RISKS
CAPACITY BUILDING
CAPITAL ACCUMULATION
CAPITAL CONSTRAINT
CAPITAL CONSTRAINTS
CAPITAL COST
CAPITAL COSTS
CAPITAL INJECTION
CAPITAL MARKET
CAPITAL MARKETS
CAPITAL REQUIREMENTS
CAPITAL RETURNS
CAPITAL SHORTAGES
CAPITAL STOCK
CAPITAL STOCKS
CHECKS
COLLATERAL
CONTRACTUAL OBLIGATIONS
COST OF CAPITAL
CREDIT CONSTRAINED FIRMS
CREDIT CONSTRAINT
CREDIT CONSTRAINTS
CREDIT HISTORY
CREDIT INSTITUTIONS
CREDIT MARKET
CREDIT MARKETS
CREDIT RATIONING
DEGREES OF RISK
DEMOGRAPHIC CHARACTERISTICS
DEVELOPING COUNTRIES
DEVELOPING COUNTRY
DEVELOPMENT ECONOMICS
DIVERSIFICATION
DUMMY VARIABLE
DUMMY VARIABLES
DURABLE
DURABLE GOODS
EARNINGS
ECONOMETRIC MODELS
ECONOMIC CONSTRAINTS
ECONOMIC DEVELOPMENT
ECONOMIC GROWTH
ECONOMIC POLICIES
ECONOMIC STATISTICS
ENDOWMENTS
ENTERPRISE PERFORMANCE
ENTREPRENEUR
ENTREPRENEURIAL ACTIVITIES
ENTREPRENEURIAL ACTIVITY
ENTREPRENEURS
ENTRY BARRIERS
EQUIPMENT
EXCESSIVE RISK
EXPECTED UTILITY
EXPECTED VALUE
EXPENDITURE
EXPENDITURES
EXTERNAL FINANCE
FAMILY FINANCE
FAMILY LOANS
FARMERS
FEMALE ENTREPRENEURS
FINANCIAL MEANS
FINANCIAL RESOURCES
FINANCIAL SUPPORT
FIXED COSTS
FORMAL BANKS
GDP
GROUP OF FIRMS
GROWTH THEORY
HIGH INTEREST RATES
HOLDING
HOUSEHOLD WEALTH
HOUSEHOLDS
HUMAN CAPITAL
INCOME GROWTH
INFORMATION ASYMMETRIES
INFORMATION ON ENTREPRENEURS
INFORMATION ON INVESTMENT
INSTRUMENT
INSURANCE
INSURANCE MARKET
INSURANCE MARKETS
INSURANCE PRODUCTS
INTEREST RATE
INTERNAL FINANCE
INTERNAL FUNDS
INVENTORIES
INVENTORY
INVESTING
INVESTMENT BEHAVIOR
JOB CREATION
LABOR FORCE SURVEY
LABOR MARKET
LABOR MARKETS
LACK OF ACCESS
LEVEL OF RISK
LIQUID WEALTH
LIQUIDITY
LIQUIDITY CONSTRAINT
LIQUIDITY CONSTRAINTS
LIQUIDITY PREMIUM
LIQUIDITY PROBLEMS
LOAN
LOTTERY
MARGINAL COST
MARGINAL PRODUCT
MARGINAL UTILITY
MARGINAL UTILITY OF CONSUMPTION
MARKET CONSTRAINTS
MARKET ECONOMY
MARKET FAILURE
MARKET FAILURES
MARKET INTEREST RATE
MARKET INTEREST RATES
MICRO DATA
MICRO ENTERPRISES
MICRO-CREDIT
MICRO-ENTERPRISE
MICRO-FINANCE
MICRO-FINANCE INSTITUTIONS
MICROCREDIT
MICROENTERPRISES
MIDDLE INCOME COUNTRIES
MONEY LENDERS
MONEYLENDERS
MORAL HAZARD
OPPORTUNITY COST
OPPORTUNITY COSTS
PHYSICAL CAPITAL
POLITICAL ECONOMY
PORTFOLIO
PRICE RISK
PRICE UNCERTAINTY
PRODUCTION FUNCTION
PRODUCTIVE INVESTMENT
PROFITABILITY
PURCHASING POWER
PURCHASING POWER PARITY
RATE OF RETURN
RATES OF RETURN
RECEIPTS
REINVESTMENT
RETAINED EARNINGS
RISK AVERSION
RISK PERCEPTIONS
RISK PREMIUM
RISK-AVERSE INDIVIDUALS
SAFE ASSET
SAVINGS
SELF-EMPLOYMENT
SMALL BUSINESS
SMALL ENTERPRISES
SMALL-SCALE ENTREPRENEURS
SOURCE OF CREDIT
SOURCES OF FINANCE
START-UP
TAX
TAXIS
TRADE SECTOR
TRADING
TRANSITION COUNTRY
TRANSITION ECONOMY
TRUST FUND
UNION
VALUE ADDED
WEALTH




Country City Visitors