| Abstract: |
This paper develops a conceptual framework and offers new statistical evidence
on the access to credit by micro, small, and medium enterprises (MSMEs) in
Guatemala and Nicaragua. To this end, and after reviewing the existing
literature on the topic, it produces new empirical evidence drawn from the
official Household Survey and the World Bank’s Investment Climate Survey,
conducted in both countries in 2006. The core contribution of the paper lies
in the critical revision of three pieces of common knowledge, namely: (1) A
large fraction of MSMEs has an excess demand for credit; (2) In the presence
of credit market failures, governments must and actually do assist MSMEs in
gaining access to loan facilities; and (3) Alternative credit instruments,
such as leasing, factoring, microcredit, and third-party guarantee schemes,
can be a suitable and massive solution for the lack of financing. Our analysis
refutes to a large extent these assertions and advances some basic policy
prescriptions that should help improve the resource allocation and impact of
specific MSME financial programs. |