The sensitivity of SME’s investment and employment to the cost of debt financing

Bonfim, Diana; Raposo, Clara; Custódio, Cláudia

http://hdl.handle.net/10400.5/23996

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Authors

Bonfim, Diana

Raposo, Clara

Custódio, Cláudia

Abstract(s)

We use variation in the access to a government credit certification program in Portugal to estimate the sensitivity of SMEs´ investment and employment to the cost of debt financing. Targeted firms have access to a credit certification and loan guarantees. We use a multidimensional regression discontinuity design to estimate real effects. Eligible firms increase borrowing and obtain bank loans at lower rates than non-eligible firms, allowing them to increase investment and employment during crises. Eligible firms also exhibit increased return on assets and default less. Industry-level analysis shows reduced heterogeneity in access to credit in more exposed industries

Keywords

SME Financing Credit Rating Credit Access Credit Certification

URI

http://hdl.handle.net/10400.5/23996

Citation

Bonfim, Diana . Clara Raposo e Cláudia Custódio .2019. “The sensitivity of SME’s investment and employment to the cost of debt financing” .Banco de Portugal. Economic and Research Department. Working Papers nº 15 | 2019.