Comparison of Effects from Different Institutions: Public Credit Guarantee in Korea* |
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Authors: | Inha Oh Jeong‐Dong Lee |
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Affiliation: | 1. Korea Energy Economics Institute, 665‐1, Naeson 2‐dong, Uiwang‐si, Gyeonggi‐do 437‐713, Korea;2. Technology Management, Economics and Policy Program, Seoul National University, San 56‐1, Shillim‐Dong, Gwanak‐Gu, Seoul 151‐742, Korea |
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Abstract: | We aim to compare the activities of the two main credit guarantee institutions in Korea. There has been mounting criticism that although these institutions were mandated to play different roles in financing small and medium‐sized enterprises (SME), their operations are, in fact, similar, and many SME receive overlapping support from both institutions. Using the propensity score matching method (allowing for multiple, mutually exclusive support scenarios) to compare the effects of PCG on different institutions, the present study provides suggestions to help the government make decisions regarding the consolidation of PCG funds. The results suggest that the institutions function differently and target different SME. However, overlapping support enables firms to expand their sales only, indicating the existence of inefficiency in the case of overlapping support to firms. |
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Keywords: | credit guarantee propensity score matching Korea policy impact H43 H81 L25 L26 N25 |
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