Choosing not to borrow: Imprinting effects of informality on firms’ credit self-rationing

While firm financing constraints have been widely studied, limited attention has been paid to credit self-rationing. Based on the imprinting hypothesis and firm-level data from 30 countries, this study finds that informal experience significantly increases the likelihood of avoiding formal credit. This effect operates via structural and behavioral imprints shaped by early institutional exposure. Specifically, the formality of institutional structure and compliance behaviors both reinforce firms’ self-rationing tendencies, whereas no evidence exists that cognitive imprints operate as an effective mediating channel. The heterogeneity analysis indicates that the effects are stronger for non-female-led firms, particularly in countries characterized by weaker business environments. Moreover, the effect is most pronounced among firms facing severe financing obstacles, suggesting that avoidance motives outweigh optimization motives. The study provides demand-side evidence on the developmental origins of financing behavior in emerging and developing economies and offers implications for improving financial inclusion.