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dc.titleFinancing Costs and Development
dc.contributor.authorCavalcanti, Tiago
dc.contributor.authorKaboski, Joseph P.
dc.contributor.authorMartins, Bruno
dc.contributor.authorSantos, Cezar
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageBrazil
dc.date.available2023-10-24T00:10:00
dc.date.issue2023-10-24T00:10:00
dc.description.abstractMost aggregate theories of financial frictions model credit available at a cost of financing equal to the savings rate but rationed. However, using a comprehensive firm-level credit registry, we document both high levels and high dispersion in ex post credit spreads to Brazilian firms. We develop a quantitative dynamic general equilibrium model in which dispersion in spreads arises from intermediation costs and market power. Calibrating to the Brazilian data, we show that, for equivalent levels of external financing, spreads have profound impacts on aggregate development indeed moreso than credit rationing does and spreads yield firm dynamics that are more consistent with observed patterns.
dc.format.extent65
dc.identifier.doihttp://dx.doi.org/10.18235/0005227
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Financing-Costs-and-Development.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectFinancial Friction
dc.subjectSmall Business
dc.subjectBank Loan
dc.subjectInterest Rate
dc.subjectEntrepreneurship
dc.subjectRating
dc.subjectProductivity
dc.subjectEconomy
dc.subjectPopulation Aging
dc.subjectFinance
dc.subject.jelcodeO11 - Macroeconomic Analyses of Economic Development
dc.subject.jelcodeO16 - Financial Markets • Saving and Capital Investment • Corporate Finance and Governance
dc.subject.jelcodeE22 - Investment • Capital • Intangible Capital • Capacity
dc.subject.keywordsFinancial Frictions;Credit spreads;Aggregate misallocation
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01526
idb.operationRG-K1098
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