Does Firm Distance Define Access to Institutional Loans? Evidence from Northeast India

Abstract

The paper aims to address two questions: (1) Does firm distance from banks define access to loan? And (2) How experience of the firm owner plays an important role in the accessibility of credit? Using a primary survey collected from 180 small retail service businesses of Nagaland, India, the study documents the mentioned objectives of the paper. In addition, the study documents bank wise comparative analysis of rural-urban disparity of the deployment of banking facilities in the state, to get a holistic understanding of the banking facilities in the region. Beside descriptive statistics, the study used the method of multinomial logistic model estimation to address the central questions of the paper. The results of the empirical findings reveal that the age of the enterprise, firm distance and the experience of the entrepreneur play a significant role in the accessibility of institutional loans.