IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/129139.html

Public policies for private finance

Author

Listed:
  • De Haas, Ralph
  • González-Uribe, Juanita

Abstract

We review the literature on the effectiveness of public policies to facilitate firms’ access to finance. The rationale for such policies is to address market failures that cause financial constraints. Using a simple taxonomy, we discuss the current evidence on common interventions to tackle these constraints: public lending through state and development banks, public lending through private banks, subsidized credit, credit guarantee schemes, export credit agencies, publicly backed venture capital, and tax incentives for equity investors. Based on the quantity and quality of the available evidence, we summarize the policies that have proven most effective in helping firms access external financing. In addition, we highlight areas where future research is needed to address current knowledge gaps and to provide more definitive policy guidance.

Suggested Citation

  • De Haas, Ralph & González-Uribe, Juanita, 2025. "Public policies for private finance," LSE Research Online Documents on Economics 129139, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:129139
    as

    Download full text from publisher

    File URL: https://researchonline.lse.ac.uk/id/eprint/129139/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Koetter & Alexander Popov, 2021. "Political Cycles in Bank Lending to the Government," The Review of Financial Studies, Society for Financial Studies, vol. 34(6), pages 3138-3180.
    2. Bruno Crépon & Florencia Devoto & Esther Duflo & William Parienté, 2015. "Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 123-150, January.
    3. Hong Ru, 2018. "Government Credit, a Double†Edged Sword: Evidence from the China Development Bank," Journal of Finance, American Finance Association, vol. 73(1), pages 275-316, February.
    4. Uesugi, Iichiro & Sakai, Koji & Yamashiro, Guy M., 2010. "The Effectiveness of Public Credit Guarantees in the Japanese Loan Market," Journal of the Japanese and International Economies, Elsevier, vol. 24(4), pages 457-480, December.
    5. Chiara Broccolini & Giulia Lotti & Alessandro Maffioli & Andrea F Presbitero & Rodolfo Stucchi, 2021. "Mobilization Effects of Multilateral Development Banks," The World Bank Economic Review, World Bank, vol. 35(2), pages 521-543.
    6. Josh Lerner & Ramana Nanda, 2020. "Venture Capital's Role in Financing Innovation: What We Know and How Much We Still Need to Learn," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 237-261, Summer.
    7. Leleux, Benoit & Surlemont, Bernard, 2003. "Public versus private venture capital: seeding or crowding out? A pan-European analysis," Journal of Business Venturing, Elsevier, vol. 18(1), pages 81-104, January.
    8. William Mullins & Patricio Toro, 2018. "Credit Guarantees and New Bank Relationships," Working Papers Central Bank of Chile 820, Central Bank of Chile.
    9. Agarwal, Natasha & Chan, Jackie M.L. & Lodefalk, Magnus & Tang, Aili & Tano, Sofia & Wang, Zheng, 2023. "Mitigating information frictions in trade: Evidence from export credit guarantees," Journal of International Economics, Elsevier, vol. 145(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Akgündüz, Yusuf Emre & Cılasun, Seyit Mümin & Dursun-de Neef, H. Özlem & Hacıhasanoğlu, Yavuz Selim & Yarba, İbrahim, 2026. "How do banks propagate economic shocks?," European Economic Review, Elsevier, vol. 186(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Federico Huneeus & Joseph P. Kaboski & Mauricio Larrain & Sergio L. Schmukler & Mario Vera, 2024. "Crisis Credit, Employment Protection, Indebtedness, and Risk," Working Papers Central Bank of Chile 1035, Central Bank of Chile.
    2. Andrea Bellucci & Gianluca Gucciardi & Daniel Nepelski, 2025. "Public grants beneficiaries and venture capital-backed firms: a tale of two funding strategies," The Journal of Technology Transfer, Springer, vol. 50(5), pages 2262-2305, October.
    3. Marek Kacer & Nicholas Wilson & Sana Zouari & Marc Cowling, 2025. "Entrepreneurial finance and the survival of equity-funded firms in crisis periods: the case of COVID-19," Small Business Economics, Springer, vol. 65(2), pages 837-870, August.
    4. Léon, Florian, 2025. "Blended Binds: How DFI's support programs stifle bank lending in Africa," World Development, Elsevier, vol. 191(C).
    5. Diegmann, André & Pohlan, Laura & Weber, Andrea, 2024. "Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament," IZA Discussion Papers 17031, IZA Network @ LISER.
    6. Lucia Dalla Pellegrina & Giorgio Di Maio & Paolo Landoni & Emanuele Rusinà, 2021. "Money management and entrepreneurial training in microfinance: impact on beneficiaries and institutions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 1049-1085, October.
    7. Clément de Chaisemartin & Luc Behaghel, 2020. "Estimating the Effect of Treatments Allocated by Randomized Waiting Lists," Econometrica, Econometric Society, vol. 88(4), pages 1453-1477, July.
    8. Emily Breza & Cynthia Kinnan, 2021. "Measuring the Equilibrium Impacts of Credit: Evidence from the Indian Microfinance Crisis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1447-1497.
    9. Schertler, Andrea & Tykvová, Tereza, 2011. "Venture capital and internationalization," International Business Review, Elsevier, vol. 20(4), pages 423-439, August.
    10. Matteo Aquilina & Giulio Cornelli & Marina Sanchez del Villar, 2024. "Regulation, information asymmetries and the funding of new ventures," BIS Working Papers 1162, Bank for International Settlements.
    11. Islam, Asadul & Nguyen, Chau & Smyth, Russell, 2015. "Does microfinance change informal lending in village economies? Evidence from Bangladesh," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 141-156.
    12. repec:osf:osfxxx:nwp8k_v1 is not listed on IDEAS
    13. Daniel Bjorkegren & Joshua Blumenstock & Omowunmi Folajimi-Senjobi & Jacqueline Mauro & Suraj R. Nair, 2022. "Instant Loans Can Lift Subjective Well-Being: A Randomized Evaluation of Digital Credit in Nigeria," Papers 2202.13540, arXiv.org.
    14. Shipeng Yan & Wei Jiang & Yue Xu, 2026. "Global investors, hidden suppliers: how institutions shape the impact of stock market liberalization programs on corporate responsibility," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 57(2), pages 197-219, March.
    15. Wang, Xiaoming & Wu, Weijun & Yin, Chen & Zhou, Sili, 2019. "Trade credit, ownership and informal financing in China," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    16. Pankaj C. Patel & Mike G. Tsionas, 2022. "Learning‐by‐lending and learning‐by‐repaying: A two‐sided learning model for defaults on Small Business Administration loans," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 906-919, June.
    17. Jaaskelainen, Mikko & Maula, Markku & Murray, Gordon, 2007. "Profit distribution and compensation structures in publicly and privately funded hybrid venture capital funds," Research Policy, Elsevier, vol. 36(7), pages 913-929, September.
    18. Avellán, Leopoldo & Galindo, Arturo J. & Lotti, Giulia & Rodríguez, Juan Pablo, 2024. "Bridging the gap: Mobilization of multilateral Development Banks in Infrastructure," World Development, Elsevier, vol. 176(C).
    19. Ambler, Kate & Bakhtiar, M. Mehrab & DeBrauw, Alan & Uddin, Mohammad Riad, 2026. "Risk Aversion and Credit Access: Solving Financial Exclusion through Contract Innovation," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404341, Agricultural and Applied Economics Association.
    20. Wadhwa, Kavita & Syamala, Sudhakara Reddy, 2023. "Are business groups different from other family firms? Evidence from corporate investments during political uncertainty," Emerging Markets Review, Elsevier, vol. 54(C).
    21. Rao, Siqi & Dai, Pengyi & Zhou, Zheng & Yuan, Li, 2026. "Indirect effects of government guidance funds on firm green innovation: Strengths and limitations of financialized industrial policy in China," International Review of Economics & Finance, Elsevier, vol. 106(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:129139. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.