The Impact of Government-backed Lending to Corporates: The Role of Firm Size, Age and Regional Development

Assessing the impact of public support programmes is key to fine-tune their design, increase their accountability and to assess their performance. There is little empirical evidence, however, on the impact of intermediated lending activities and their heterogeneous effect across SMEs. This paper tries to fill this gap by assessing the impact on firms’ performance of EIB-backed intermediated loans to circa 100,000 SMEs in the EU over the period 2008-2017. The results show that, relative to their peers, beneficiaries of the publicly backed loans experience significantly higher employment growth, firm growth, and investment. Nevertheless, the analysis finds substantial heterogeneity in the impact across different subgroups of loan beneficiaries. Firms in less developed regions benefit substantially more from the government-backed lending, relative to beneficiaries located in more developed regions. Moreover, the additionality is significantly higher for micro, small and medium-sized enterprises. Finally, younger beneficiaries show comparatively stronger growth in investment.