Academy of Entrepreneurship Journal (Print ISSN: 1087-9595; Online ISSN: 1528-2686)


Income Trajectory and Access to Financing of Mses in Ecuador an Empirical Approach Using Discrete Choice Models

Author(s): Ricardo Luna, Cristian Ortiz, Ruth Granda, Tania Luna, Miguel Granda, Betty Luna

This research examines the sales revenue and trajectory of micro and small enterprises as the main factors for access to financing in Ecuador. Cross-sectional data from the National Economic Census of Ecuador were used for a total of 247,696 microenterprises and 2,833 small enterprises. Using probit and logit models, the results show that sales income is more important for small firms when accessing financing, while firm age is the most relevant factor for microenterprises. In addition, factors such as the use of ICTs, own establishment and social capital are important for accessing financial products. The importance of the findings of this research resides in providing evidence to determine that there are differentiated factors of access to financing for micro and small enterprises in Ecuador. An economic policy implication derived from this research is that the participation of the State in the execution of credit programs for MSEs would reduce the existing credit gap in this business sector. In addition, public policy makers can generate differentiated financing mechanisms for micro and small enterprises since the financing barriers are different for micro and small enterprises.

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