The Effect of Credit Guarantees on Survival and Performance of SMEs in Korea
AbstractThis study evaluates the impact of provision of credit guarantee in Korea at the firm level. The data is assembled from two public funds providing credit guarantees covering the period 2000 to 2003. The sample firms consist of SMEs mainly. To measure the effects of credit guarantee, the relationship between credit guarantees, survival of firms, and their productive performance is analyzed. Since the data is collected as repeated cross sections and firms are not identified over time, the analysis is carried out by using a pseudo panel data approach. The pseudo panel data is created using time invariant firm characteristics. The result from regression analysis conducted indicates that the amounts of credit guarantee and the number of times a firm receives credit guarantees have effects on their survival and growth. The amounts of credit guarantee increase the growth of sales and productivity while frequency of credit guarantees decreases business failure. Size and age play a decisive role in survival of firms and their employment growth as well. Moreover, survival and performance of firms are different across periods, industries, and locations.
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Bibliographic InfoPaper provided by The Ratio Institute in its series Ratio Working Papers with number 92.
Length: 29 pages
Date of creation: 25 Apr 2006
Date of revision:
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Credit guarantee; SMEs; Pseudo panel data; survival; performance;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-29 (All new papers)
- NEP-ENT-2006-04-29 (Entrepreneurship)
- NEP-FIN-2006-04-29 (Finance)
- NEP-FMK-2006-04-29 (Financial Markets)
- NEP-SEA-2006-04-29 (South East Asia)
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- Oh, Donghyun & Heshmati, Almas & Lööf, Hans, 2009.
"Total Factor Productivity of Korean Manufacturing Industries: Comparison of Competing Models with Firm-Level Data,"
Working Paper Series in Economics and Institutions of Innovation
201, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- Dong-hyun Oh & Almas Heshmati & Hans Loof, 2009. "Total Factor Productivity of Korean Manufacturing Industries: Comparison of Competing Models with Firm-Level Data," TEMEP Discussion Papers 200922, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
- Almas Heshmati & Hyesung Kim, 2011. "The R&D and productivity relationship of Korean listed firms," Journal of Productivity Analysis, Springer, vol. 36(2), pages 125-142, October.
- Inha Oh & Jeong-Dong Lee & Almas Heshmati & Gyoung-Gyu Choi, 2009. "Evaluation of credit guarantee policy using propensity score matching," Small Business Economics, Springer, vol. 33(3), pages 335-351, October.
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