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The Effects of Policy Funds on the Investment and Management Stabilization Financing of Small- and Medium-sized Enterprises

Author

Listed:
  • Chung, Jinhwa

    (Keimyung University)

  • Kim, Bohyun

    (The Bank of Korea)

  • Moon, Seongman

    (Jeonbuk National University)

Abstract

This study empirically examines the impacts of policy funds from three different aspects using data on Daegu City’s local government loans. First, we estimate the influence of policy funds on mitigating financial constraints affecting the investment decisions of Small- and Medium-sized Enterprises (SMEs), yielding inconclusive results indicating no significant discernible effects of policy funds. Second, we scrutinize the ramifications of policy funds on enterprise’s management stability, revealing that these funds contribute to stabilizing the operations of small-scale enterprises. Third, we explore whether policy funds engender an unintended consequence of bolstering distressed enterprises, presenting empirical evidence that suggests a delayed exit of such enterprises.

Suggested Citation

  • Chung, Jinhwa & Kim, Bohyun & Moon, Seongman, 2023. "The Effects of Policy Funds on the Investment and Management Stabilization Financing of Small- and Medium-sized Enterprises," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 27(4), pages 347-376, December.
    • Handle: RePEc:ris:eaerev:0428
    DOI: 10.11644/KIEP.EAER.2023.27.4.428
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    More about this item

    Keywords

    Policy Funds; SMEs; Investment; Management Stability;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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