Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary A brief description of the project's goals and its current state Abstract <p>While small and medium enterprises (SMEs) represent a large segment of activity and employment, there has been little research on how their growth is affected by financial constraints. Indeed, because the credit needs of SMEs are too big for microfinance products, but that they lack the collateral to borrow from the traditional banking sector, SMEs are in some way the “missing middle” of credit constraint research. This project addresses this evidence gap by evaluating the impact of a new loan product, designed specifically for SMEs, on firm growth and other market outcomes.</p> <p> In 2013, the researchers conducted a field experiment with 3,000 SMEs, to which they randomly gave information about the loan. Take-up for the informed group of firms was over 32%, compared to 5% for the non-informed firms. Indeed, the features of the loan - the absence of collateral requirement, geographically-concentrated clients and a lean cost structure – make it attractive to SMEs, while keeping lending costs down for the Rural Credit Cooperatives which offers the loan. On the basis of that experiment, the researchers are now conducting follow-up surveys with the firms to gather data on performance and other market outcomes. Looking at the change in firm investment and profits will shed light on the returns to the loan, that is, the extent to which the lack of financing options for SMEs is a barrier to growth. Further, the study will consider how access to the loan affects the likelihood of an SME entering the formal sector, and will examine the effect of one firm getting financed its competitors and on knowledge diffusion with the industry.</p> The full abstract of the study, if available Links https://pedl.cepr.org/content/growth-effects-financial-deepening-evidence-china-0 Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question How is SME growth hindered by financial constraints? Sample Trial population and sample selection Number of treatment groups Size of treatment groups Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description Small and medium enterprises were randomly given information about a loan product that does not require collateral and has a lean cost structure. Rounds of data collection Baseline data collection and method Data collection method and data collected Evaluation Outcome variables <p> Business profits, sales, employment, formality, loan activity, network effects</p> Results <p>Pending</p> Intervention costs Cost benefit ratio Reference Cai, J., Szeidl, A. (forthcoming). 'The Impact of Providing Loans to SMEs on Firm Performance in China'. Ongoing research. Citation for use in academic references
