The Effect of Credit Guarantees on R&D Investment of SMEs in Korea

Almas Heshmati ()

No 7851, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Korean government has invested significant amount of resources through credit guarantee funds to promote SMEs survival, performance and R&D investment. This study attempts to identify determinants of provision of credit guarantees and estimate their effects on firms R&D expenditures. The relationship between duration of credit and firm's survival and performance is also investigated. Account is made for heterogeneity by various characteristics of firms when looking at credit guarantee and in-house R&D investment relationships. This study results in identification of factors that enhances efficiency of funds and their effects on firms' R&D investment behavior. It enables feedback effects on the public funds selection of firms guaranteed. A number of policy measures are proposed to promote a better balance between public and private investments to reduce the risk of business failure.

Keywords: firm performance; R&D investment; public funds; SMEs; Credit Guarantee; firm survival; Death Valley (search for similar items in EconPapers)
JEL-codes: C13 D92 G28 L25 O32 O38 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2013-12
New Economics Papers: this item is included in nep-cse, nep-ino, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
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Published - published in: Asian Journal of Technology Innovation, 2015, 23 (3), 407-421.

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