Supporting small firms through recessions and recoveries

Diana Bonfim, Cláudia Custódio and Clara Raposo ()

No 170, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: We use variation in the access to a government credit certification program to estimate the financial and real effects of supporting small firms. This program has been implemented during the global financial crisis, but has remained active ever since, allowing us to analyze its effects both during recessions and recoveries. Eligible firms have access to government loan guarantees and a credit quality certification. We estimate real effects using a multidimensional regression discontinuity design. We find that eligible firms borrow more and at lower rates than non-eligible firms, allowing them to increase investment and employment during crises. Industry-level analysis shows reduced productivity heterogeneity in more exposed industries, which is consistent with improved credit allocation. However, when the economy is recovering the effects of the program are less pronounced and centered on the certification component.

Keywords: Small Firms’ Financing; Credit Rating; Credit Certification; Cost of Debt; Investment (search for similar items in EconPapers)
JEL-codes: G01 G30 G38 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2022-09, Revised 2022-09
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.gee.gov.pt//RePEc/WorkingPapers/GEE_PAPERS_170.pdf First version, 2022 (application/pdf)

Related works:
Journal Article: Supporting small firms through recessions and recoveries (2023)
Working Paper: Supporting small firms through recessions and recoveries (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:mde:wpaper:0170

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