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...

Full description

Saved in:
Bibliographic Details
Published in:Economic modelling 2010, Vol.27 (1), p.358-367
Main Authors: Capasso, Salvatore, Mavrotas, George
Format: Article
Language:English
Subjects:
Asymmetric information
Bank loans
Credit market
Credit market Information asymmetries Loan processing costs Financial development Economic growth
Economic growth
Economic models
Entrepreneurs
Financial development
Information asymmetries
Investment policy
Loan processing costs
Studies
Technology adoption
Technology assessment
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary: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.
ISSN:0264-9993
1873-6122
DOI:10.1016/j.econmod.2009.09.015