Laurent Weill (University of Strasbourg) - Once Upon a Loan: How Folk Tales Shape Access to Credit

BOFIT-seminaarit

BOFIT Seminar - Laurent Weill (University of Strasbourg) - Once Upon a Loan: How Folk Tales Shape Access to Credit

Co-author: Jean-Baptiste Marigo (University of Strasbourg)

Abstract
We investigate the effect of folklore on firms’ access to credit. Using firm-level data on a large sample of 38,000 firms covering 124 countries and 274 cultural societies over the 2005-2022 period, we test the hypothesis that oral traditions linking risk-taking to success or failure influence access to credit. We find that folklore affects access to credit. Oral traditions associated with successful challenges increase access to credit, while those associated with unsuccessful challenges decrease access to credit. We further show that folklore influences access to credit through borrower discouragement and loan approval.

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