The Profitability Improving Effects of Korean SME Policy Lending Programs
This study attempts to provide a basis of selecting policy directions by empirically analyzing the effect of policy lending programs for SMEs in Korea using micro firm-level data and examining whether the programs contribute to improving the performance of SMEs and thus effectively carry out their m...
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| Format: | Article |
| Language: | English |
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Korea Development Institute
2005-12-01
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| Series: | KDI Journal of Economic Policy |
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| Online Access: | https://doi.org/10.23895/kdijep.2005.27.2.45 |
| Summary: | This study attempts to provide a basis of selecting policy directions by empirically analyzing the effect of policy lending programs for SMEs in Korea using micro firm-level data and examining whether the programs contribute to improving the performance of SMEs and thus effectively carry out their missions. From the estimations using Ashenfelter(1978)'s approach, the evidence of differences in profitability enhancement between the benefited group and the never-benefited group could not be found in most cases. In addition, the estimations show that the policy lending program had stronger profit enhancing effects on the young SME group for the year that the program was applied, and indicate that the policy lending program might be the factor that makes the 'older' benefited SMEs to become addicted to the government policy and thus hinder them in their development to become more competitive and innovative. These results suggest that, when the programs are needed to support SMEs' financing, it is more effective to target the start-up companies or SMEs in their early stages rather than old SMEs. |
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| ISSN: | 2586-2995 2586-4130 |