TY  - GEN
AU  - D'Erasmo, Pablo N.
TI  - Access to Credit and the Size of the Formal Sector in Brazil
PY  - 2013
Y1  - 2013/05/09
DO  - 10.18235/0011472
AB  - This paper studies the link between credit conditions and formalization in Brazil, as both credit and the rate of formalization have notably increased in the last decade.  A firm dynamics model with endogenous formal and informal sectors is developed to quanti- tatively evaluate how much of the change in corporate credit and the size of the formal sector can be attributed to a reduction in the cost of financial intermediation.  The model predicts that the observed reduction in intermediation costs generates an increase in the credit-to-output ratio and in the share of formal workers, in line with the data.  It is found that-by affecting the corporate interest rate, the allocation of capital and the entry and exit rates-the change in credit conditions has important effects on firm size distribution and aggregate productivity.
UR  - https://doi.org/10.18235/0011472
ER  -