The Impact of Credit Policy on Small and Medium-Sized Enterprises (in Korean)

Hosoung Jung () and Hosoung Lim ()
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Hosoung Jung: Financial & Monetary Economics Team, Economic Research Institute, The Bank of Korea
Hosoung Lim: Financial & Monetary Economics Team, Economic Research Institute, The Bank of Korea

No 2014-2, Working Papers from Economic Research Institute, Bank of Korea

Abstract: This paper examines the impact of the Bank Intermediated Lending Support Facility (former: Aggregate Credit Ceiling Loans), a primary tool by the Bank of Korea (BOK)'s credit policy operations on bank loans to small and medium-sized enterprises (SMEs). Measuring the influence of the Bank Intermediated Lending Support Facility on SMEs' credit availability is important for evaluating and improving the system. Bank-firm level data from 2009 to 2011 are used for this analysis. The results show that the Bank Intermediated Lending Support Facility helps increase bank loans to SMEs and decrease lending rates. These effects are particularly prominent for enterprises with medium-credit scores (ratings 5-6), start-ups, and enterprises newly eligible for the Bank Intermediated Lending Support Facility. Enterprises tend to access loans from a greater number of banks after being included in the system, implying that it does influence banks' decisions by reducing information asymmetry between banks and enterprises. This is the first study which empirically analyzes the effect of the BOK's credit policy on SMEs. Its findings have significant implications for credit policy, which has been increasingly adopted by central banks since the global financial crisis.

Keywords: SMEs; credit policy; central bank; Bank Intermediated Lending Support Facility (former: Aggregate Credit Ceiling Loans); bank-firm level data (search for similar items in EconPapers)
JEL-codes: E58 G2 H81 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2014-03-01
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