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

Varouj Aivazian and Eric Santor

Canadian Journal of Economics/Revue canadienne d'économique, 2008, vol. 41, issue 2, 475-500

Abstract: 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. Ce mémoire examine le comportement d'investissement d'un échantillon de petites firmes au Sri Lanka. Utilisant un ensemble de données de panel unique, on analyse et compare les activités de deux groupes de petites firmes qui se distinguent par leur accès différentiel au financement; le premier groupe contient des entreprises qui reçoivent des prêts subventionnés par la Banque mondiale, alors que le second contient des entreprises qui ne sont pas subventionnées. On montre que le programme de subventions entraîne des niveaux plus élevés d'investissement pour les firmes financièrement contraintes. Les résultats ne sont cependant pas concluants à savoir si le programme a amélioré l'efficacitééconomique.

Date: 2008
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Citations: View citations in EconPapers (7)

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https://doi.org/10.1111/j.1540-5982.2008.00471.x

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Journal Article: Financial constraints and investment: assessing the impact of a World Bank credit program on small and medium enterprises in Sri Lanka (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:canjec:v:41:y:2008:i:2:p:475-500

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