Antonio García-Tabuenca, José Luis Crespo-Espert and Juan R. Cuadrado-Roura

Public financing and entrepreneurship: behaviour and regional heterogeneity of SMEs

The existence of restrictions for small- and medium-sized enterprises (SMEs) to access long-term credit has led governments to establish institutional systems to facilitate such access and reduce the cost of credit, with the condition that its feasibility is justified (and assessed) and there are no distortions as regards competition. Very few empirical in-depth studies exist regarding this field of academic research, and scarce attention has been paid from a regional perspective. Due to the characteristics of the business structures in the different regions, as well as the existence of agglomeration economies and the regional dispersion of the entrepreneurship rate, this paper analyses the effects of the productive financing support model, provided by the Government of Spain, through the Instituto de Crédito Oficial (ICO) [Official Credit Institute], on the behaviours and performances of the beneficiary companies. In the last decade, this source of financing has assigned 30,000 million euro. The results show the general acceptance of this policy due to its adaptation to the interests of the companies and its contribution to the improvement of the economic-financial efficiency indicators. Regionally, no substantial differences have been observed, but the results of this research show a greater contribution to the dynamism of the more progressive regions.