Individualism Reduces Borrower Discouragement

Borrower discouragement contributes to reducing access to credit worldwide. In this study, we examine whether individualism influences the discouragement of borrowers. We used data on borrower discouragement and individualism at the firm level for a large dataset of 31,0 0 0 firms from 57 countries. We find that firms in individualistic countries are less likely to be discouraged from applying for loans. Furthermore, individualistic norms reduce borrower discouragement through their impact on lower corruption in lending and weak informal support networks. Our results hold after controlling for other cultural dimensions, addressing potential endogeneity and sample selection issues. Thus, our findings indicate that individualism reduces borrower discouragement, thereby improving access to credit of firms.(c) 2023 Elsevier B.V. All rights reserved.