Indirect Effects of Access to Finance

Jing Cai, Adam Szeidl

    Research output: Contribution to journalArticlepeer-review

    Abstract (may include machine translation)

    We created experimental variation across markets in China in the share of firms having access to a new loan product. Access to finance had a large positive direct effect on the performance of treated firms but a similar-sized negative indirect effect on that of firms with treated competitors, leading to nondetectable gains in producer surplus. Access to finance had a positive direct effect on business quality and consumer satisfaction and a negative effect on price, which were not offset by indirect effects, implying net gains in consumer surplus. We document other indirect effects and combine effects in a welfare evaluation.
    Original languageEnglish
    Pages (from-to)2308-2351
    Number of pages44
    JournalAmerican Economic Review
    Volume114
    Issue number8
    DOIs
    StatePublished - Aug 2024

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