The Impact of Government-Supported Participative Loans on Employment Growth in Entrepreneurial Ventures

34 Pages Posted: 19 Dec 2017

See all articles by Fabio Bertoni

Fabio Bertoni

EM Lyon (Ecole de Management de Lyon) - Department of Economics, Finance, Control

José Martí

Universidad Complutense de Madrid - Department of Accounting and Finance

Carmelo Reverte

Technical University of Cartagena

Date Written: December 6, 2017

Abstract

We study the employment growth for entrepreneurial ventures that received a government-sponsored participative loan (PL), a hybrid form of financing between debt and equity. We use propensity-score matching (PSM) and instrumental variable analysis (2SLS) to study a sample of 512 entrepreneurial ventures that received a PL from a Spanish government agency between 2005 and 2011. We find evidence that PLs significantly boosted their beneficiaries’ employment. In the two years following loan issuance, a 1-million-Euro PL generated an increase in average employment by between 12.1 (PSM) and 14.7 (2SLS) units relative to the average for the two years prior to loan issuance. The effect on growth is significant and stable, and PLs increase their beneficiaries’ annual employment growth by 10.6%.

Keywords: participative loans, long-term financing, government support, entrepreneurial ventures, employment growth

JEL Classification: G21, G28, H81

Suggested Citation

Bertoni, Fabio and Martí Pellón, José and Reverte Maya, Carmelo, The Impact of Government-Supported Participative Loans on Employment Growth in Entrepreneurial Ventures (December 6, 2017). Available at SSRN: https://ssrn.com/abstract=3088072 or http://dx.doi.org/10.2139/ssrn.3088072

Fabio Bertoni

EM Lyon (Ecole de Management de Lyon) - Department of Economics, Finance, Control ( email )

23, av. Guy de Collongue BP 174
69132 Ecully Cedex
France

José Martí Pellón (Contact Author)

Universidad Complutense de Madrid - Department of Accounting and Finance ( email )

Carretera de Humera s/n
Madrid 28223, Madrid 28223
Spain
+ 3491 3942310 (Phone)
+ 34 91 3942534 (Fax)

Carmelo Reverte Maya

Technical University of Cartagena ( email )

Faculty of Business Sciences, c/Real, 3
Cartagena, Murcia 30201
Spain
+34968325925 (Phone)

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