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Determinants of SME support participation in the Russian two-tier system

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  • Bakaykina, A.

    (Moscow City Strategic Development Agency, Moscow, Russia)

Abstract

This article analyzes the factors influencing the participation of SMEs in the second-tier support mechanism, under which state banks provided end recipients with soft loans, partial guarantees and a hybrid instrument (100% guarantee with preferential funding from the Bank of Russia). The existing research literature predominantly considers the one-tier mechanism of state support, while the issues of functioning of the two-tier system remains understudied. Taking into account the peculiarities of the examines' support mechanism, the set of factors influencing the participation of companies in support programs was largely reconsidered. For quantitative assessment a classical logit model was used, however, taking into account the presence of "rare events" in the data structure, regressions were re-estimated using two modifications (relogit, firthlogit). The analysis showed that state banks in general have low incentives to serve new clients and use alternative lending technologies. At the same time, the mechanism of state support itself requires significant adjustments.

Suggested Citation

  • Bakaykina, A., 2024. "Determinants of SME support participation in the Russian two-tier system," Journal of the New Economic Association, New Economic Association, vol. 62(1), pages 75-100.
    • Handle: RePEc:nea:journl:y:2024:i:62:p:75-100
    DOI: 10.31737/22212264_2024_1_75-100
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    References listed on IDEAS

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    More about this item

    Keywords

    two-tier support of SME; hybrid instrument; subsidized loans; guarantees; state-owned banks; development financial institutions; SME Corporation; SME Bank; RGO;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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