Loan processing costs, information asymmetries and the speed of technology adoption
This paper presents a simple model in which credit-constrained firms might delay the adoption of new and more productive technologies because of the external financing costs involved. Applying for a loan can be a very costly process by itself. Where there is a high degree of credit rationing, these costs might even deter entrepreneurs from applying for a loan altogether. We argue that the efficiency of the banking system, by affecting such costs, can influence the profitability of new technologies and entrepreneur's investment decisions, which, in turn, influence new technology implementation, capital accumulation and growth.
Year of publication: |
2010
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Authors: | Capasso, Salvatore ; Mavrotas, George |
Published in: |
Economic Modelling. - Elsevier, ISSN 0264-9993. - Vol. 27.2010, 1, p. 358-367
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Publisher: |
Elsevier |
Keywords: | Credit market Information asymmetries Loan processing costs Financial development Economic growth |
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