دسترسی به اعتبار، بلایای طبیعی و اعطای وام رابطه ای

This paper analyzes the effect of unpredictable aggregate shocks on loan demand and access to credit by combining client-level information from an Ecuadorian microfinance institution with geophysical data on natural disasters, more specifically volcanic eruptions. The results of this ‘natural experiment’ show that while credit demand increases due to volcanic activity, access to credit is restricted. Yet, we also find that bank-borrower relationships can lower these lending restrictions and that clients who are known to the institution are about equally likely to receive loans after volcanic eruptions occurred.

What determines access to credit in developing economies? And how does credit availability change in times of unpredictable aggregate shocks? These are the questions we address in this paper by making use of a unique dataset combining client-level information from a self-sustainable Ecuadorian microfinance institution (MFI) with geophysical data on natural disasters, more specifically volcanic eruptions. How easily and at what costs firms in emerging and developing economies receive access to external finance depends on a wide range of factors both internal and external to the firm. External factors are mainly connected to the institutional and regulatory environment. Important aspects include, among others, the enforceability of contracts, the protection of property rights, and the availability of credit registries (Beck et al., 2004, Beck et al., 2008 and Brown et al., 2009). With respect to factors internal to a firm, not only is the availability of own financial resources and collateral important, but also ’soft’ information on the potential borrower. Whether banks base their lending decision mainly on ’hard’ quantitative data such as financial accounts, denoted usually as transaction lending, or more on qualitative information, which is mainly referred to as relationship lending, depends on the types of clients and the environment in which the banks operate (Boot, 2000 and Boot and Thakor, 2000). For instance, if clients cannot offer high collateral or if public information about the creditworthiness of potential borrowers is limited due to asymmetric information, relationship lending may be the only suitable option (Sharpe, 1990 and Berger and Udell, 1995). Indeed, in such environments, Petersen and Rajan (1995) have shown that relationship lending may increase access to credit especially for small firms. Until today, no analysis has been undertaken regarding the question whether and to what extent access to credit changes after unpredictable aggregate shocks such as natural disasters. While Del Ninno et al. (2003) analyze credit demand after a major flood in Bangladesh in 1998 and find that the demand for loans increases, they cannot answer the question whether lending was restricted for some borrowers as they do not have bank-internal information. Apart from this study, there exists a wide literature on the potential micro-effects of credit-constraints arguing that access to credit can dilute the negative effects of aggregate shocks on consumption and similar outcomes (Jacoby and Skoufias, 1997, Beegle et al., 2006, Gitter and Barham, 2007, Khandker, 2007, Shoji, 2010 and Becchetti and Castriota, 2011). However, for measuring access to credit, mostly proxy variables are used as the data that would be needed for analyzing the loan approval decision of a bank is usually not available. Khwaja and Mian (2008) analyze the effect of unforeseen liquidity shocks on access to credit and find that banks experiencing larger drops in liquidity are more restrictive in terms of lending afterwards and that smaller firms are less able to compensate this loss through additional borrowing. While this study shows that banks pass their liquidity shocks on to firms, they are not analyzing the question in which way a destruction of the capital stock of a firm affects the lending decision of a bank. With this paper, we attempt to close this gap by analyzing a unique dataset including information on all loan applications and subsequent approvals for ProCredit Ecuador between January 2002 and August 2007. As we combine this data with information on volcanic eruptions in Ecuador during the same time, we are able to exploit a ’natural experiment’ allowing us to clearly identify the determinants of access to credit in response to unpredictable aggregate shocks. In that regard our paper is also related to an emerging literature studying loan applications, most recently as affected by the financial crisis (Puri et al., 2010, Berg and Kirschenmann, 2012 and Jimenez et al., 2012). In order to come up with testable propositions for our empirical analysis, we present a simple theoretical model based on relationship lending that highlights the effect of volcanic eruptions on credit demand and access to credit. The concept of relationship lending best reflects the focus of the MFI we study and the setting of a developing country characterized by high degrees of asymmetric information. The predictions of our model are the following: First, after unforeseen aggregate shocks, the number of loans demanded will increase. Second, due to the higher risk involved, the fraction of credit applicants actually receiving a loan after aggregate shocks will decrease. And third, as the bank will attempt to differentiate between lower- and higher-risk clients, heterogeneous effects will be observable in a way that repeat clients will face less lending restrictions compared to new credit applicants who are unknown to the institution. Within our empirical analysis we first analyze the demand for loans and in a second step access to credit. The results show that credit demand increases significantly after volcanic eruptions which implies that there exists a need for additional financing after shocks occurred. When analyzing access to credit on the level of the individual credit applicant, the results suggest that high volcanic activity in the last months before the credit application leads to significant decreases in the probability to be approved for a loan. Yet, we also find that being a repeat client lowers these lending restrictions. More specifically, the results show that returning clients do not only have a higher probability to receive a loan in general, but that they are about equally likely to be approved for a loan after volcanic shocks occurred. Given that repeat clients are less risky due to the fact that the MFI has gathered relevant information on them during previous interactions, they face lower lending restrictions. New customers, however, are unknown to the institution and thus, in times of crises, it becomes even more difficult for them to receive financing, a result which can be directly associated with asymmetric information. The results are of particular interest as it is usually assumed that the existence of credit markets can dilute the effects of shocks, for instance through the provision of emergency loans (Eswaran and Kotwal, 1989 and Morduch, 1995). However, this presumption leaves the perspective of the financial institution aside which has to ensure its profitability. The results are robust to using different indicators for volcanic activity, i.e. volcanic eruptions or the seismic activity of the volcano, and alternative indicators for relationship. More precisely, while we focus our main results on the differences between new and repeat clients, we also use the number of previous loans as an indicator for the depth of the relationship. Furthermore, in order to analyze whether our results also hold for a sector highly affected by volcanic activity, we take a closer look at the agricultural sector and show that our main findings remain unchanged. To confirm that the effects depend on the proximity to the volcano, we further analyze the impact of volcanic activity in a region which is unlikely to be affected by volcanic eruptions and show that, indeed, no significant effects on access to credit can be found, further validating our main results. Finally, as far as the generalizability of our results is concerned, the findings should hold for comparable banks operating in settings with high degrees of asymmetric information and facing unpredictable aggregate shocks. The remainder of the paper is organized as follows. In Section 2, we present a theoretical model on the effects of aggregate shocks on the demand for loans and access to credit. Section 3 discusses the institution, the context, and the data we use and provides some descriptive statistics. The econometric models employed for testing the theoretical propositions are presented in Section 4. Section 5 is concerned with the empirical results. Finally, Section 6 closes the argument.

The determinants of access to credit for firms in developing economies depend on a wide range of factors. Important aspects include, among others, the institutional and regulatory environment, the clients’ financial means as well as qualitative information on the potential borrower, particularly important in the case of relationship lending. While the drivers of credit availability have been analyzed from various perspectives, until today, there has been no study addressing the question whether and to what extent access to credit changes after unpredictable aggregate shocks such as natural disasters. This, however, is of particular interest as it is often assumed that the existence of credit markets can dilute the effects of shocks, for instance through the provision of emergency loans. With this paper we made a first step toward closing this gap by analyzing a dataset including all loan applications and subsequent approvals for a self-sustainable Ecuadorian MFI between January 2002 and August 2007. As we combine this data with information on volcanic eruptions in Ecuador during the same time, we are able to exploit a ’natural experiment’ allowing us to clearly identify the determinants of credit availability in response to unpredictable aggregate shocks. The empirical results show that credit demand increases significantly after volcanic eruptions suggesting that there exists a need for additional financing after shocks occurred. When analyzing access to credit on the level of the individual client, the results indicate that high volcanic activity in the last months before the credit application leads to significant decreases in the probability to be approved for a loan. Yet, we also find that being a repeat borrower lowers these lending constraints. More specifically, the results show that returning clients do not only have a higher probability to receive a loan in general, but that they are about equally likely to be approved for a loan after volcanic shocks occurred. As, in our setting, it is less risky for a MFI to lend to repeat clients who are already known to the institution, repeat borrowers face less lending restrictions. New clients, however, do not have this advantage and therefore, in times of crises, it becomes even more difficult for them to receive financing, a result which can be directly associated with asymmetric information. Our results therefore show that bank-borrower relationships are important determinants for increasing access to finance in times of unpredictable aggregate shocks. The findings are further validated given that our results also hold for the agricultural sector, the sector most affected by volcanic eruptions, and by the fact that no significant effects of volcanic activity on access to credit can be found in a region which is unlikely to be affected by volcanic eruptions. Finally, with respect to the generalizability of our results, the findings should hold for comparable banks operating in settings with high degrees of asymmetric information and facing unpredictable aggregate shocks.