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Education and Credit: A Matthew Effect
Date Issued
2022-04
Date Available
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
UCD Centre for Economic Research Working Paper Series
WP2022/14
Copyright (Published Version)
2022 the Authors
Classification
G21
G32
I23
I24
I26
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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