Education and Credit: A Matthew Effect

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Title: Education and Credit: A Matthew Effect
Authors: Delis, Manthos D.Deli, YotaPeydró, José-LuisWhelan, Adele
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Date: Apr-2022
Online since: 2022-06-30T15:35:37Z
Abstract: Using a unique corporate loans dataset for entrepreneurs with small and microenterprises, this paper examines how educational attainment affects bank credit decisions and subsequent individual and firm outcomes. Our results highlight a “Matthew Effect,” where an initial advantage is self-amplifying. We find that entrepreneurs who obtain university education are more likely to apply for credit, and receive higher credit scores, and better lending terms. Via this credit channel, such entrepreneurs have significantly better future firm outcomes compared to those without a university education. Furthermore, we find a key role for investments in innovation, intangible assets, and lower within-firm pay inequality.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 48
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2022/14
Copyright (published version): 2022 the Authors
Keywords: EducationCreditHigher educationLoan applicationBank credit decisionsFirm performancePay Inequality
JEL Codes: G21; G32; I23; I24; I26
Language: en
Status of Item: Not peer reviewed
This item is made available under a Creative Commons License:
Appears in Collections:Economics Working Papers & Policy Papers

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