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Funding for lending schemes should prioritize SME lending

Author

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  • Barnabás Székely

    (Magyar Nemzeti Bank (Central Bank of Hungary))

Abstract

In the aftermath of the sovereign debt crisis the Central Bank of Hungary implemented a great-scale funding for lending scheme designed specifically to subsidize SME finance. This creates a unique opportunity to identify this policy in the SVAR framework as asymmetric credit supply shocks specific to SME lending. I find that during the post-crisis recovery, such disturbances had a substantial effect on lending conditions and the real economy. Moreover, rather than supplanting lending to large enterprises, the program had considerable positive spillover effects to this sector. Finally, for a unit of lending, these shocks had larger and more persistent effect on output than general credit supply shocks. These results are robust to different proxies of economic performance and alternative identification strategies. I conclude that under tight lending conditions funding for lending schemes are more effective if concentrated to SMEs.

Suggested Citation

  • Barnabás Székely, 2020. "Funding for lending schemes should prioritize SME lending," MNB Occasional Papers 2020/138, Magyar Nemzeti Bank (Central Bank of Hungary).
    • Handle: RePEc:mnb:opaper:2020/138
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    References listed on IDEAS

    as
    1. Peersman, Gert, 2011. "Macroeconomic effects of unconventional monetary policy in the euro area," Working Paper Series 1397, European Central Bank.
    2. Peersman, Gert, 2011. "Macroeconomic Effects of Unconventional Monetary Policy in the Euro Area," CEPR Discussion Papers 8348, C.E.P.R. Discussion Papers.
    3. Uhlig, Harald, 2005. "What are the effects of monetary policy on output? Results from an agnostic identification procedure," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 381-419, March.
    4. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    5. Byungun Yoon & Juneseuk Shin & Sungjoo Lee, 2016. "Open Innovation Projects in SMEs as an Engine for Sustainable Growth," Sustainability, MDPI, vol. 8(2), pages 1-27, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bayesian SVARs; Credit supply shocks; Funding for lending scheme; SME finance;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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