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Bidding against the odds? The impact evaluation of grants for young micro and small firms during the recession

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  • Stjepan Srhoj
  • Bruno Škrinjarić
  • Sonja Radas

Abstract

Impact evaluations of entrepreneurship policies targeting young firms have been somewhat neglected thus far in the literature. While most research studies focus on the impact of research and development (R&D) grants, a larger percentage of young firms would benefit from grants that assist them in other activities. In this paper we examine the impact of small business development grants on survival and performance of young firms. We study this topic in the context of a long recession in Croatia (2009 to 2014), which makes it possible to better observe the effect of the public instrument intervention. As the grants were too small to produce any direct effects, the positive effects were achieved indirectly through enabling young firms to get bank loans, either by means of certification effect or because of behavoral additionality which raised their ability to apply for loans. The results show positive impact on firm survival after the recession.

Suggested Citation

  • Stjepan Srhoj & Bruno Škrinjarić & Sonja Radas, 2018. "Bidding against the odds? The impact evaluation of grants for young micro and small firms during the recession," Working Papers 374, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
  • Handle: RePEc:ost:wpaper:374
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    Cited by:

    1. Bruno Skrinjaric & Jelena Budak & Edo Rajh, 2018. "The Perceived Impact of Government Regulation in Reducing Online Privacy Concern," Working Papers 1803, The Institute of Economics, Zagreb.
    2. Ondřej Dvouletý & Ivana Blažková, 2019. "The Impact of Public Grants on Firm-Level Productivity: Findings from the Czech Food Industry," Sustainability, MDPI, Open Access Journal, vol. 11(2), pages 1-24, January.
    3. Stjepan Srhoj & Bruno Skrinjaric & Sonja Radas & Janette Walde, 2019. "Closing the Finance Gap by Nudging: Impact Assessment of Public Grants for Women Entrepreneurs," Working Papers 1902, The Institute of Economics, Zagreb.

    More about this item

    Keywords

    Grants; recession; young firms; survival; firm performance; bank loans;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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