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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

  • Varouj Aivazian
  • Dipak Mazumdar
  • Eric Santor

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.

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File URL: http://www.bankofcanada.ca/wp-content/uploads/2010/02/wp03-37.pdf
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Paper provided by Bank of Canada in its series Staff Working Papers with number 03-37.

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Length: 56 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:bca:bocawp:03-37
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