Persistence of government funding in small business finance

This paper studies the interaction of Finnish manufacturing firms and a state-owned specialized financing company, whose objective is to cure credit market imperfections. The study ex-amines how the presence of such agency affects the behavior of the firms over time. Specifically, the study analyzes whether the observed persistence in the subsidized financing originates from true state dependence or unobserved firm-specific heterogeneity. The results show that there is positive state dependence in the granted government loans and guarantees. The findings indicate that the private sector agents may adjust their financing behavior in response to the government intervention in the credit markets. The unobserved firm-specific heterogeneity accounts for much of the observed persistence, which provides another reason for why some firms are more dependent on the government funding than the others.

Information om publikationen

Serie
Discussion Papers no. 1232
Datum
2010
Nyckelord
luottomarkkinoiden epätäydellisyydet, pk-yritysten rahoitus, julkinen yritysrahoitus
Nyckelord
Julkisen yritysrahoituksen pysyvyys
JEL
G21,G24,G32,H81
Sidor
33
Pris
10 €
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Språk
Engelska