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Financial Constraints and Investment: Assessing the Impact of a World Bank Loan Program on Small and Medium-Sized Enterprises in Sri Lanka

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  • Varouj Aivazian
  • Dipak Mazumdar
  • Eric Santor

Abstract

The authors examine the investment behaviour of a sample of small, credit-constrained firms in Sri Lanka. Using a unique panel-data set, they analyze and compare the activities of two groups of small firms distinguished by their different access to financing; one group consists of firms with heavily subsidized loans from the World Bank, and the other consists of firms without such subsidies. The use of program-evaluation techniques reveals that the relaxation of financing constraints did not affect economic efficiency for the group of firms that received subsidized capital.

Suggested Citation

  • Varouj Aivazian & Dipak Mazumdar & Eric Santor, 2003. "Financial Constraints and Investment: Assessing the Impact of a World Bank Loan Program on Small and Medium-Sized Enterprises in Sri Lanka," Staff Working Papers 03-37, Bank of Canada.
    • Handle: RePEc:bca:bocawp:03-37
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    References listed on IDEAS

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    Cited by:

    1. Iichiro Uesugi & Koji Sakai & Guy M. Yamashiro, 2006. "Effectiveness of Credit Guarantees in the Japanese Loan Market," Discussion papers 06004, Research Institute of Economy, Trade and Industry (RIETI).

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    • G00 - Financial Economics - - General - - - General

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