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The effect of financial liberalization on allocation of credit : panel data evidence for Ecuador (English)

The authors discuss two effects of financial liberalization, using panel data for Ecuadorian firms. After describing the main thrust of the reforms and the general macroeconomic developments, they document the changes that occurred in the firms' financial structure and in the allocation of credit. Descriptive evidence suggests that there has been a reallocation of resources towards older, larger firms after liberalization. The authors also investigate econometrically whether financial reform has helped direct credit to more efficient firms. The results, based on measures of technical efficiency obtained from estimating stochastic production frontiers, show that this has indeed been the case in Ecuador.

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Citation

Jaramillo, Fidel Schiantarelli, Fabio Weiss, And

The effect of financial liberalization on allocation of credit : panel data evidence for Ecuador (English). Policy, Research working papers ; no. WPS 1092. Financial policy and systems Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/540901468752070694/The-effect-of-financial-liberalization-on-allocation-of-credit-panel-data-evidence-for-Ecuador