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

Author

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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 (Leibniz Institute for East and Southeast European Studies).
    • Handle: RePEc:ost:wpaper:374
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    JEL classification:

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

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