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The Effect of Credit Guarantees on R&D Investment of SMEs in Korea

Author

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  • Heshmati, Almas

    (Jönköping University)

Abstract
Korean government has invested significant amount of resources through credit guarantee funds to promote SMEs survival, performance and R&D investment. This study attempts to identify determinants of provision of credit guarantees and estimate their effects on firms R&D expenditures. The relationship between duration of credit and firm's survival and performance is also investigated. Account is made for heterogeneity by various characteristics of firms when looking at credit guarantee and in-house R&D investment relationships. This study results in identification of factors that enhances efficiency of funds and their effects on firms' R&D investment behavior. It enables feedback effects on the public funds selection of firms guaranteed. A number of policy measures are proposed to promote a better balance between public and private investments to reduce the risk of business failure.

Suggested Citation

  • Heshmati, Almas, 2013. "The Effect of Credit Guarantees on R&D Investment of SMEs in Korea," IZA Discussion Papers 7851, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7851
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    References listed on IDEAS

    as
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    10. Ono, Arito & Uesugi, Iichiro & Yasuda, Yukihiro, 2013. "Are lending relationships beneficial or harmful for public credit guarantees? Evidence from Japan's Emergency Credit Guarantee Program," Journal of Financial Stability, Elsevier, vol. 9(2), pages 151-167.
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    More about this item

    Keywords

    firm performance; R&D investment; public funds; SMEs; Credit Guarantee; firm survival; Death Valley;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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