Credit Rationing and Size-Contingent Eligibility Criteria

Public interventions in credit markets frequently prioritize micro, small, and medium enterprises, often excluding large firms based on the explicit or implicit assumption that they do not face meaningful credit constraints. Using new empirical evidence, this paper challenges that premise, showing that large firms also experience significant financing frictions and are not fully insulated from credit rationing. These findings call into question the widespread practice of using firm size as a proxy for firms' credit needs in the design of public credit support programs. A reassessment of size-based eligibility criteria is warranted to ensure that policies more accurately target firms facing genuine financial constraints, regardless of scale.