1,721,186 research outputs found
REPLICATION DATA--Financial literacy and financial resilience: Evidence from around the world
No full textIndividual-level microdata on financial literacy around the world (2014)
Learning Through Social Networks: How Foreign Workers Optimize FinTech Usage for Remittances
No full textThe impact of the business environment on the business creation process
Full text linkNew data from the 2008 World Bank Group Entrepreneurship Survey indicates a very strong and statistically significant relationship between entrepreneurship and a better business environment. Data for 100 countries on the number of total and newly registered corporations over an eight-year period (2000-2007) were collected directly from registrars of companies around the world. Data were also collected on the functioning and structure of business registries. Empirical evidence suggests that greater ease in starting a business and better governance are associated with increased entrepreneurial activity. After controlling for economic development (gross domestic product per capita), higher entrepreneurial activity is significantly associated with cheaper, more efficient business registration procedures and better governance. Although the degree of progress in the modernization of business registries varies greatly, countries usually have a common goal to evolve from a paper-based business registry to a one-stop, automated, web-enabled registry capable of delivering products and services online via transactions involving authenticated users and documents. Tests show that business registry modernization (often a component of broader private sector reforms) has a positive impact not only on the ease of creating a business, but also on new business registration. Overall, the data show that a quick, efficient, and cost-effective business registration process is critical for fostering formal sector entrepreneurship.E-Business,Competitiveness and Competition Policy,Business in Development,Business Environment,Governance Indicators
What does"entrepreneurship"data really show ? a comparison of the global entrepreneurship monitor and World Bank group datasets
Full text linkThis paper compares two datasets designed to measure entrepreneurship. The Global Entrepreneurship Monitor dataset captures early-stage entrepreneurial activity; the World Bank Group Entrepreneurship Survey dataset captures formal business registration. There are a number of important differences when the data are compared. First, GEM data tend to report significantly greater levels of early-stage entrepreneurship in developing economies than do the World Bank data. The World Bank data tend to be greater than GEM data for developed countries. Second, the magnitude of the difference between the datasets across countries is related to the local institutional and environmental conditions for entrepreneurs, after controlling for levels of economic development. A possible explanation for this is that the World Bank data measure rates of entry in the formal economy, whereas GEM data are reflective of entrepreneurial intent and capture informality of entrepreneurship. This is particularly true for developing countries. Therefore, this discrepancy can be interpreted as the spread between individuals who could potentially operate businesses in the formal sector - and those that actually do so: In other words, GEM data may represent the potential supply of entrepreneurs, whereas the World Bank data may represent the actual rate of entrepreneurship. The findings suggest that entrepreneurs in developed countries have greater ease and incentives to incorporate, both for the benefits of greater access to formal financing and labor contracts, as well as for tax and other purposes not directly related to business activities.Banks&Banking Reform,E-Business,Access to Finance,Microfinance,Information Security&Privacy
Bankruptcy around the World: Explanations of its Relative Use
Full text linkThe recent literature on law and finance has drawn attention to the importance of creditor rights in influencing the development of financial systems and in affecting firm corporate governance and financing patterns. Recent financial crises have also highlighted the importance of insolvency systems - a key element of creditor rights - to prevent and resolve corporate sector financial distress. The literature and crises have highlighted the role that creditor rights play in not only affecting the efficiency of ex-post resolution of distressed corporations, but also in influencing ex-ante risk-taking incentives and an economy's degree of entrepreneurship more generally. Yet, little is known on how much formal insolvency systems are actually being used, how the use of the courts to resolve financial distress relates to creditor rights, and whether any specific creditor rights matter more. This paper starts with documenting how often bankruptcy is used in a panel of 35 countries. It next investigates the relation between specific design features of insolvency regimes and the use of bankruptcy, considering also the quality of countries’ judicial systems. We find, controlling for overall development and macroeconomic shocks, that bankruptcies are higher in common-law countries and in market-oriented financial systems. Stronger creditor rights are generally associated with more use of bankruptcy, except for the presence of a "stay on assets" that is associated with fewer use of bankruptcy. Greater judicial efficiency is associated with more use of bankruptcy, but there is some substitution between stronger creditor rights and greater judicial efficiency. These findings suggest that the relationship between specific creditor rights features and the use of bankruptcy systems is more complex than perhaps thought. It may also help clarify the relationships between creditor rights, the development of financial systems, corporate ownership, and financing patterns.
The impact of the business environment on young firm financing
Full text linkThis paper uses a dataset of more than 70,000 firms in over 100 countries to systematically study the use of different financing sources for new and young firms, in comparison to mature firms. The authors find that in all countries younger firms rely less on bank financing and more on informal financing. However, they also find that younger firms use more bank finance in countries with stronger rule of law and better credit information, and that the reliance of young firms on informal finance decreases with the availability of credit information. Overall, the results suggest that improvements to the legal environment and availability of credit information are disproportionately beneficial for promoting access to formal finance by young firms.Access to Finance,Debt Markets,Bankruptcy and Resolution of Financial Distress,Banks&Banking Reform,Financial Intermediation
The Role of Factoring for Financing Small and Medium Enterprises
No full textAround the world, factoring is a growing source of external financing for corporations and small and medium-size enterprises (SMEs). What is unique about factoring is that the credit provided by a lender is explicitly linked to the value of a supplier's accounts receivable and not the supplier's overall creditworthiness. Therefore, factoring allows high-risk suppliers to transfer their credit risk to their high-quality buyers. Factoring may be particularly useful in countries with weak judicial enforcement and imperfect records of upholding seniority claims because receivables are sold, rather than collateralized, and factored receivables are not part of the estate of a bankrupt SME. Empirical tests find that factoring is larger in countries with greater economic development and growth and developed credit information bureaus. In addition, the author finds that creditor rights are not related to factoring. The author also discusses reverse factoring, which is a technology that can mitigate the problem of borrowers' informational opacity in business environments with weak information infrastructures if only receivables from high-quality buyers are factored. She illustrates the case of the Nafin reverse factoring program in Mexico and highlights how the use of electronic channels and a supportive legal and regulatory environment can cut costs and provide greater SME services in emerging markets
The role of factoring for financing small and medium enterprises
Full text linkAround the world, factoring is a growing source of external financing for corporations and small and medium-size enterprises (SMEs). What is unique about factoring is that the credit provided by a lender is explicitly linked to the value of a supplier's accounts receivable and not the supplier's overall creditworthiness. Therefore, factoring allows high-risk suppliers to transfer their credit risk to their high-quality buyers. Factoring may be particularly useful in countries with weak judicial enforcement and imperfect records of upholding seniority claims because receivables are sold, rather than collateralized, and factored receivables are not part of the estate of a bankrupt SME. Empirical tests find that factoring is larger in countries with greater economic development and growth and developed credit information bureaus. In addition, the author finds that creditor rights are not related to factoring. The author also discusses reverse factoring, which is a technology that can mitigate the problem of borrowers'informational opacity in business environments with weak information infrastructures if only receivables from high-quality buyers are factored. She illustrates the case of the Nafin reverse factoring program in Mexico and highlights how the use of electronic channels and a supportive legal and regulatory environment can cut costs and provide greater SME services in emerging markets.Banks&Banking Reform,Banking Law,Financial Intermediation,Environmental Economics&Policies,Economic Theory&Research
The uniqueness of short-term collateralization
Full text linkThe author finds evidence that lines of credit secured by accounts receivable are associated with business borrowers with a high risk of default. While an unsecured short-term loan is repaid from the borrower's future cash flow, a loan secured by accounts receivable (a unique form of"inside"collateral) is repaid from previously generated and observed sales (the borrower's trade credit terms to its customers). Consequently, lenders that secure accounts receivable are most concerned with the credit risk of the borrower's customers and the borrower's ability to continue to generate new sales. A stylizedtheoretical model demonstrates that the value of a secured line-of-credit loan in minimizing contracting costs is associated with the borrower's business risk and the quality of the borrower's customers. Empirical tests on a sample of publicly traded U.S. manufacturing firms find that firms with secured line of credit loans are observably riskier and have fewer expected growth opportunities. The author's findings suggest that observably riskier borrowers can borrow more on a secured than on an unsecured basis. The results highlight the important role of secured letters of credit in providing liquidity to risky, credit-constrained firms that might not have access to external financing through other channels.Banks&Banking Reform,Economic Adjustment and Lending,Economic Theory&Research,International Terrorism&Counterterrorism,Business in Development
The Uniqueness of Short-Term Collateralization
No full textThe author finds evidence that lines of
credit secured by accounts receivable are associated with
business borrowers with a high risk of default. While an
unsecured short-term loan is repaid from the borrower's
future cash flow, a loan secured by accounts receivable (a
unique form of "inside" collateral) is repaid from
previously generated and observed sales (the borrower's
trade credit terms to its customers). Consequently, lenders
that secure accounts receivable are most concerned with the
credit risk of the borrower's customers and the
borrower's ability to continue to generate new sales. A
stylized theoretical model demonstrates that the value of a
secured line-of-credit loan in minimizing contracting costs
is associated with the borrower's business risk and the
quality of the borrower's customers. Empirical tests on
a sample of publicly traded U.S. manufacturing firms find
that firms with secured line of credit loans are observably
riskier and have fewer expected growth opportunities. The
author's findings suggest that observably riskier
borrowers can borrow more on a secured than on an unsecured
basis. The results highlight the important role of secured
letters of credit in providing liquidity to risky,
credit-constrained firms that might not have access to
external financing through other channels
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