Additionality of government guaranteed loans for SMEs in Israel

Tzameret H. Rubin () and Nir Ben-Aharon ()
Additional contact information
Tzameret H. Rubin: Loughborough University
Nir Ben-Aharon: Bank of Israel

Journal of Economics and Finance, 2021, vol. 45, issue 3, No 7, 504-528

Abstract: Abstract The study examines the Israeli Government Loans for SMEs in 2015. Our findings are based on three surveys. A business survey of 384 businesses that were granted a Government loan, a business survey of 99 businesses that were granted loans but decided not to take them and a survey of 50 loan consultants who advised those businesses about their eligibility and the Terms and Conditions of the loans. We tested Loan Adjusted Additionality and Loan Baseline Additionality and found that 53% of loans taken from the Government Loans Foundation (GLF) are additional loans. SMEs would not have taken a loan, or any part of one, if not for the Government Loans Foundation Scheme. Our contribution to the literature is by including Indirect Additionality, demonstrating the importance of the GLF Scheme, not only by assisting SMEs in their financial planning and growth but also, by signalling early stage business resilience, reducing the risks for commercial banks through regulated, financial due diligence. This outcome expands the pool of SMEs which have access to free market loans and has the potential to improve their survival rate, thus fostering economic growth.

Keywords: Adjusted additionality; Baseline additionality; SME; Government loan (search for similar items in EconPapers)
JEL-codes: D04 E61 G14 G18 G23 H81 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s12197-021-09538-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jecfin:v:45:y:2021:i:3:d:10.1007_s12197-021-09538-8

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-021-09538-8

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().