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Credit and entrepreneurs’ income

Manthos D. Delis et al.

Journal of Financial Intermediation2025https://doi.org/10.1016/j.jfi.2025.101161article
AJG 4ABDC A*
Weight
0.43

Abstract

Small business entrepreneurs facing credit constraints may experience significantly different future income trajectories compared to their unconstrained counterparts. We quantify this difference using uniquely detailed loan application data and a regression discontinuity design based on a bank’s credit score cutoff rule employed in the loan approval process. Our findings indicate that loan acceptance increases recipients’ real income by 11% five years later compared to rejected applicants. This effect persists across a wide range of robustness tests and is primarily driven by the utilization of borrowed funds for profitable investments, as captured by the bank’s ex-ante soft information and the ex-post firm performance. Additionally, within the cohort of accepted applicants, future income is higher for those who were easily accepted compared to marginally accepted borrowers with similar creditworthiness, highlighting the important efficiency effects of loan usage.

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https://doi.org/https://doi.org/10.1016/j.jfi.2025.101161

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@article{manthos2025,
  title        = {{Credit and entrepreneurs’ income}},
  author       = {Manthos D. Delis et al.},
  journal      = {Journal of Financial Intermediation},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jfi.2025.101161},
}

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Evidence weight

0.43

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.32 × 0.4 = 0.13
M · momentum0.55 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.