Fábio Duarte (ORGMAN) has long been passionate about bank lending and entrepreneurial finance. One of his main lines of research focuses on the access of European small firms to bank credit. He is interested in the signalling role of business, personal, and third-party guarantees and the impact of default risk on small firms’ financing costs, credit rationing, and credit discouragement.
More recently, in parallel, he has branched out and participated in an FCT-financed project on ‘The Role of Microcredit in Promoting Financial and Social Inclusion’ with Ana Paula Gama (UBI), Mário Augusto (UCoimbra) and Ricardo Correia (UBI).
In this project, the researchers have illuminated the role of microcredit in fighting poverty and promoting the financial inclusion of entrepreneurs at risk. Among the latter are women and refugees, who face a vicious circle of socioeconomic exclusion and discrimination from traditional forms of financing. Using data on 180 000 loan campaigns from Kiva, a leader prosocial crowdfunding platform, the team studied the success of refugees in developing countries seeking financing for their ventures. They found that those who claimed prior borrowing experience were especially successful. This indicates that, even in this type of financing, signalling is crucial to overcome asymmetric information problems. Additionally, the team found that gender discrimination persists in this niche of entrepreneurs, furthering the debate on gender biases in online prosocial crowdfunding platforms.
In another article, the authors use signalling theory to highlight the funding gap among refugee entrepreneurs. Using data from the same platform, they find that when refugee loan campaigns are associated with a third party of good repute, such as a local financial institution, their success in tapping funds to lend is significantly greater than when no such association exists. Local financial institutions offer reputational signals that can certify the signals emitted by entrepreneurs. This result further underscores the importance of signalling and offers valuable evidence to policymakers wishing to promote the social inclusion of refugees.
