Impact of credit guarantee on firm performance: Evidence from China's SMEs

Yu, J; Peng, F; Shi, X; Yang, L

Impact of credit guarantee on firm performance: Evidence from China's SMEs

Yu, J Peng, F Shi, X

Yang, L

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Publisher:: ELSEVIER
Publication Type:: Journal Article
Citation:: Economic Analysis and Policy, 2022, 75, pp. 624-636
Issue Date:: 2022-09-01

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Field	Value	Language
dc.contributor.author	Yu, J
dc.contributor.author	Peng, F
dc.contributor.author	Shi, X https://orcid.org/0000-0001-9653-7395
dc.contributor.author	Yang, L
dc.date.accessioned	2022-11-01T21:45:15Z
dc.date.available	2022-11-01T21:45:15Z
dc.date.issued	2022-09-01
dc.identifier.citation	Economic Analysis and Policy, 2022, 75, pp. 624-636
dc.identifier.issn	0313-5926
dc.identifier.uri	http://hdl.handle.net/10453/163115
dc.description.abstract	Using detailed monthly survey data on small and medium-sized enterprises (SMEs) in China, this study uses the total factor productivity (TFP) of SMEs as a proxy variable to investigate credit guarantees’ impacts on the performance of guarantors and guaranteed SMEs. The results reveal that obtaining a credit guarantee can increase an SME's probability of obtaining bank loans, the loan amount received from banks, R&D expenditures, fixed asset investments, and TFP by 2%, 17.4%, 7.6%, 6.1%, and 5.2%, respectively. Credit guarantees robustly improve the guaranteed SME's TFP through its R&D expenditures and fixed asset investments. We also found that credit guarantees have a spillover effect among different SMEs. Another critical finding is that providing credit guarantees to other SMEs will not harm the guarantor's TFP, which is a second alternative to a mutually beneficial situation. These findings suggest that policymakers should focus on credit guarantees’ mitigating effect on financing constraints, which could increase SMEs’ TFP. Hence, policymakers must improve the system design within the credit guarantee market and accelerate the innovation of credit guarantee products in China to promote the high-quality development of SMEs.
dc.language	English
dc.publisher	ELSEVIER
dc.relation.ispartof	Economic Analysis and Policy
dc.relation.isbasedon	10.1016/j.eap.2022.06.017
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.subject	14 Economics
dc.title	Impact of credit guarantee on firm performance: Evidence from China's SMEs
dc.type	Journal Article
utslib.citation.volume	75
utslib.for	14 Economics
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/DVC (International)
pubs.organisational-group	/University of Technology Sydney/DVC (International)/Australia-China Relations Institute
utslib.copyright.status	embargoed	*
utslib.copyright.embargo	2024-09-01T00:00:00+1000Z
dc.date.updated	2022-11-01T21:45:14Z
pubs.publication-status	Published
pubs.volume	75

Abstract:

Using detailed monthly survey data on small and medium-sized enterprises (SMEs) in China, this study uses the total factor productivity (TFP) of SMEs as a proxy variable to investigate credit guarantees’ impacts on the performance of guarantors and guaranteed SMEs. The results reveal that obtaining a credit guarantee can increase an SME's probability of obtaining bank loans, the loan amount received from banks, R&D expenditures, fixed asset investments, and TFP by 2%, 17.4%, 7.6%, 6.1%, and 5.2%, respectively. Credit guarantees robustly improve the guaranteed SME's TFP through its R&D expenditures and fixed asset investments. We also found that credit guarantees have a spillover effect among different SMEs. Another critical finding is that providing credit guarantees to other SMEs will not harm the guarantor's TFP, which is a second alternative to a mutually beneficial situation. These findings suggest that policymakers should focus on credit guarantees’ mitigating effect on financing constraints, which could increase SMEs’ TFP. Hence, policymakers must improve the system design within the credit guarantee market and accelerate the innovation of credit guarantee products in China to promote the high-quality development of SMEs.

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http://hdl.handle.net/10453/163115