Financial constraints and investment: assessing the impact of a World Bank credit program on small and medium enterprises in Sri Lanka

Varouj Aram Aivazian () and Eric Santor ()

Canadian Journal of Economics, 2008, vol. 41, issue 2, pages 475-500

Abstract: This paper examines the investment behaviour of a sample of small, credit-constrained firms in Sri Lanka. Using a unique panel data set, we analyze and compare the activities of two groups of small firms distinguished by their differential access to financing; one group consists of firms with subsidized loans from the World Bank, while the other group consists of firms without such subsidies. The paper shows that the program led to higher levels of investment for financially constrained firms. However, the evidence is inconclusive on whether the program improved economic efficiency.

JEL-codes: G00 O16 (search for similar items in EconPapers)
Date: 2008
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