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Youngkyu Kim (), Inha Oh () and Jeong-Dong Lee ()
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Youngkyu Kim: Korea Electronics Technology Institute, 68 Yatap-dong, Bundang-gu Seongnam, Kyonggi-do 463-816, Republic of Korea

The Singapore Economic Review (SER), 2015, vol. 60, issue 04, 1-25

Abstract: In the intermediate goods industry, largely made up of small and medium enterprises (SMEs), a government can use a matching fund to execute policies that, for example, provide funds to promote and support firms' innovative activities. This study performs an empirical analysis to investigate the additional effects when a government uses a matching fund in this way and, in particular, to analyze the growth of firms. Methodologically, to deal with the selectivity issue, we adopt a propensity score matching (PSM) estimator. We also investigate the performance of the matching fund according to changes in private shares. Our findings show that supported firms invested larger amounts in R&D and procured external financing through an overall improvement in their level of reliability. However, the results also show that this was not connected to further improvements in business performance. Moreover, although our results show some positive impact on assets and R&D expenditure from private investment in the matching fund, the relationship between sales and fixed assets was non-significant.

Keywords: Government support; intermediate goods industry; matching fund; selection bias; propensity score matching; venture capital; C40; G20; H20; H81; L60; O38 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1142/S0217590815500605

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