Entrepreneur Education and Firm Credit Outcomes
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Title: |
Entrepreneur Education and Firm Credit Outcomes |
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Number: |
23/01 |
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Author(s): |
Yusuf Emre Akgündüz, Abdurrahman B. Aydemir, Halil İbrahim Aydın |
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Language: |
English |
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Date: |
October 2023 |
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Abstract: |
We estimate the causal effects of entrepreneur education on credit outcomes. We link credit and business registries and identify the effects of education on access to credit, loan terms and default using a compulsory schooling reform implemented in Türkiye. More educated cohorts have higher access to credit, receive 3.3 percent larger loans and pay 0.23 percentage points lower interest rates compared to less educated cohorts despite no differences in borrowers' creditworthiness. We test alternative explanations for our findings and conclude that education reduces credit search costs and enables borrowers to shop around banks for better loan terms. |
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Keywords: |
Compulsory schooling, Entrepreneurship, Bank loans |
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JEL Codes: |
G21; I25; O16 |
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