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The big-city bias in access to finance: evidence from firm perceptions in almost 100 countries

Lee, Neil and Luca, Davide (2017) The big-city bias in access to finance: evidence from firm perceptions in almost 100 countries. Journal of Economic Geography. ISSN 1468-2702 (In Press)

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Abstract

There is mounting evidence in the developed world to suggest that there is geographical variation in access to finance. At the same time, there is a growing interest in the advantages of major cities in emerging economies in providing better access to services. Yet there is little evidence on spatial variation in access to finance in the developing world. In this paper, we address this gap. We propose that one important function of big cities is to provide better credit markets, but that – as countries develop – this ‘big city bias’ is likely to decline. We test these hypotheses using data on over 80,000 firms in 97 countries and provide new evidence that firms in large cities – with more than 1 million inhabitants – are less likely to perceive access to capital as a constraint. However, this big city bias in credit markets declines as countries develop. Keywords:

Item Type: Article
Official URL: https://academic.oup.com/joeg
Additional Information: © 2018 The Author
Divisions: Geography & Environment
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G1 - General Financial Markets > G10 - General
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O16 - Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
R - Urban, Rural, and Regional Economics > R5 - Regional Government Analysis > R51 - Finance in Urban and Rural Economies
Sets: Departments > Geography and Environment
Collections > Economists Online
Date Deposited: 11 Jan 2018 11:10
Last Modified: 11 Jan 2018 11:13
URI: http://eprints.lse.ac.uk/id/eprint/86419

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