Arbeitspapier
Persistence of government funding in small business finance
This paper studies the interaction of Finnish manufacturing firms and a state-owned specialized financing company, whose objective is to cure credit market imperfections. The study ex-amines how the presence of such agency affects the behavior of the firms over time. Specifically, the study analyzes whether the observed persistence in the subsidized financing originates from true state dependence or unobserved firm-specific heterogeneity. The results show that there is positive state dependence in the granted government loans and guarantees. The findings indicate that the private sector agents may adjust their financing behavior in response to the government intervention in the credit markets. The unobserved firm-specific heterogeneity accounts for much of the observed persistence, which provides another reason for why some firms are more dependent on the government funding than the others.
- Language
-
Englisch
- Bibliographic citation
-
Series: ETLA Discussion Papers ; No. 1232
- Classification
-
Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
- Subject
-
credit market imperfections
small business finance
government funding
- Event
-
Geistige Schöpfung
- (who)
-
Ylhäinen, Ilkka
- Event
-
Veröffentlichung
- (who)
-
The Research Institute of the Finnish Economy (ETLA)
- (where)
-
Helsinki
- (when)
-
2010
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ylhäinen, Ilkka
- The Research Institute of the Finnish Economy (ETLA)
Time of origin
- 2010