The impact of public credit guarantees on the economic outcomes of Smes: evidence from Portugal

Abstract

Public credit guarantees attributed to SMEs as a way of boosting credit access have been widely implemented in developed countries. However, literature often focuses on financial additionality. This paper investigates, for Portugal’s case, the impact of these guarantees on the economic outcomes of firms – we study economic additionality. We utilize firm-level data provided by Banco de Portugal and rely on propensity score matching methods to derive causal results. We find evidence that public credit guarantees have incremental effects on credit, employment, total assets, and fixed assets. There is no evidence of effects on total factor productivity, wages, or profitability.