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The impact of government-supported participative loans on the growth of entrepreneurial ventures

Author

Listed:
  • Fabio Bertoni

    (EM - EMLyon Business School)

  • José Marti

    (UCM - Universidad Complutense de Madrid = Complutense University of Madrid [Madrid])

  • Carmelo Reverte

    (UPCT - Universidad Politécnica de Cartagena / Technical University of Cartagena)

Abstract

We study the employment and sales growth of entrepreneurial ventures that have received a government-sponsored participative loan (PL), a hybrid form of financing between debt and equity. We use propensity-score matching (PSM) and instrumental variable analysis (2SLS) to study a sample of 512 entrepreneurial ventures that received a PL from a Spanish government agency between 2005 and 2011. We find evidence that PLs significantly boosted their beneficiaries' employment and sales. In the two years following loan issuance, a 1-million-Euro PL generated an increase in average employment of between 12.1 (PSM) and 14.7 (2SLS) units and an increase in sales of between 1.09 and 1.97 million Euro relative to the average for the two years prior to loan issuance. The effect is larger for high-tech, young and small entrepreneurial ventures and for those that received a PL during the global financial crisis. The effect on growth is significant and stable, and PLs increase their beneficiaries' annual growth by 10.6% for employment and by 18.0% for sales. We do not find evidence of industry or regional spillovers, nor do we find differences in the probability of survival of PL beneficiaries after we control for their characteristics.

Suggested Citation

  • Fabio Bertoni & José Marti & Carmelo Reverte, 2019. "The impact of government-supported participative loans on the growth of entrepreneurial ventures," Post-Print hal-02312239, HAL.
    • Handle: RePEc:hal:journl:hal-02312239
    DOI: 10.1016/j.respol.2018.09.006
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    Cited by:

    1. Akcigit, Ufuk & Seven, Ünal & Yarba, İbrahim & Yılmaz, Fatih, 2024. "Firm-level impact of public credit guarantees," European Economic Review, Elsevier, vol. 170(C).
    2. Zhong, Meirui & Lu, Qiaolin & He, Ruifang, 2022. "The heterogeneous effects of industrial policy on technological innovation: Evidence from China's new metal material industry and micro-data," Resources Policy, Elsevier, vol. 79(C).
    3. Gereben, Áron & Rop, Anton & Petriček, Matic & Winkler, Adalbert, 2019. "The impact of international financial institutions on small and medium enterprises: The case of EIB lending in Central and Eastern Europe," EIB Working Papers 2019/09, European Investment Bank (EIB).
    4. Fini, Riccardo & Perkmann, Markus & Kenney, Martin & Maki, Kanetaka M., 2023. "Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system," Research Policy, Elsevier, vol. 52(1).
    5. Stjepan Srhoj & Bruno Škrinjarić & Sonja Radas, 2021. "Bidding against the odds? The impact evaluation of grants for young micro and small firms during the recession," Small Business Economics, Springer, vol. 56(1), pages 83-103, January.
    6. Mengli Zhao & Shibin Sheng & Xiangyu Yang, 2024. "Does public employment foster or inhibit entrepreneurial intentions?," Asia Pacific Journal of Management, Springer, vol. 41(1), pages 317-349, March.
    7. Edoardo Ferrucci & Roberto Guida & Valentina Meliciani, 2021. "Financial constraints and the growth and survival of innovative start‐ups: An analysis of Italian firms," European Financial Management, European Financial Management Association, vol. 27(2), pages 364-386, March.
    8. Hottenrott, Hanna & Richstein, Robert, 2020. "Start-up subsidies: Does the policy instrument matter?," Research Policy, Elsevier, vol. 49(1).
    9. Raphaël CHIAPPINI & Sophie POMMET, 2023. "The impact of public support for innovation on SME performance and efficiency," Bordeaux Economics Working Papers 2023-06, Bordeaux School of Economics (BSE).
    10. Stjepan Srhoj & Michal Lapinski & Janette Walde, 2021. "Impact evaluation of business development grants on SME performance," Small Business Economics, Springer, vol. 57(3), pages 1285-1301, October.
    11. Santoleri, Pietro & Russo, Emanuele, 2025. "Spurring subsidy entrepreneurs," Research Policy, Elsevier, vol. 54(1).
    12. Buffart, Mickaël & Croidieu, Grégoire & Kim, Phillip H. & Bowman, Ray, 2020. "Even winners need to learn: How government entrepreneurship programs can support innovative ventures," Research Policy, Elsevier, vol. 49(10).
    13. Isabell K. Stamm & Fabian Bernhard & Nicole Hameister & Kristel Miller, 2023. "Lessons from family firms: the use of flexible work arrangements and its consequences," Review of Managerial Science, Springer, vol. 17(1), pages 175-208, January.
    14. Xincai Gao & Zhongyang Ji & Fayyaz Ahmad & Muhammad Umar Draz, 2019. "Financial Support and Growth of Township and Village Enterprises in China: Fresh Evidence From Regional Analyses," SAGE Open, , vol. 9(2), pages 21582440198, June.
    15. Jugend, Daniel & Fiorini, Paula De Camargo & Armellini, Fabiano & Ferrari, Aline Gabriela, 2020. "Public support for innovation: A systematic review of the literature and implications for open innovation," Technological Forecasting and Social Change, Elsevier, vol. 156(C).
    16. Yang, Jingwen & Tang, Zili & Yuan, Qingcui & Xu, Bing, 2021. "The economic and social benefits of the government-backed credit guarantee fund under the condition of an economic downturn," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    17. Douglas Cumming & Satish Kumar & Weng Marc Lim & Nitesh Pandey, 2023. "Mapping the venture capital and private equity research: a bibliometric review and future research agenda," Small Business Economics, Springer, vol. 61(1), pages 173-221, June.
    18. Mihaela MATEI & Mihaela IORDACHE, 2020. "Increasing Entrepreneurship In Romania Through European Structural Funds And Emigration," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(1), pages 561-571, November.
    19. Maresch, Daniela & Leo, Hannes & Walsh, Steven T., 2023. "Hotspurs in, sober bores out: A call and an agenda for entrepreneurship and innovation policies that foster rapidly scaling ventures," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    20. Yanfeng Lou & Yezhuang Tian & Kai Wang, 2020. "The Spillover Effect of US Industrial Subsidies on China’s Exports," Sustainability, MDPI, vol. 12(7), pages 1-12, April.
    21. Yang, Jingwen & Gong, Qingbin & Sendra García, Javier & Xu, Bing, 2022. "Non-parametric identification of public guarantee schemes and commercial banks," Journal of Business Research, Elsevier, vol. 144(C), pages 1196-1206.
    22. Anita Quas & Jose Martí & Carmelo Reverte, 2021. "What money cannot buy: a new approach to measure venture capital ability to add non-financial resources," Small Business Economics, Springer, vol. 57(3), pages 1361-1382, October.

    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • 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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