Tuesday, 15 September 2015

What type of companies do banks fund in Burundi?

I wrote in the last blog post about how innovative companies get a larger share of their funding from banks, compared with non-innovative companies.  I tested for other features of Burundian companies that are associated with higher bank funding, using a correlation analysis (which is quick and subject to uncertainty).  The company characteristics that are loosely associated with bank funding are:
  • Size
  • Male owners
  • (Direct) exporting
  • Long inventories
  • Suffering theft and other crime
  • Paying for goods after delivery
  • Purchasing land and buildings
  • Spending lots of time dealing with government regulations
  • Experienced employees
Data: http://www.enterprisesurveys.org/

These are features that either suggest the company has assets and is creditworthy, is reputable, or is spending on things.  So it is reasonable to think that they would be connected with bank borrowing.  For the importance of male owners, there are studies elsewhere in the world that suggest that men can access credit networks more easily than women, so the same may be true in Burundi.

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