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The article aims to answer the questions of whether public intervention in the form of financial aid for guarantee funds is necessary. This study examines the consequences of the financial aid for guarantee funds in Poland at the beginning of the 2014-2020 EU budget in the light of state intervention theory. We investigate three possible effects for organizations providing guarantees for SMEs: changes in output (the value and number of guarantees), changes in the transaction scale (average guarantee) and changes in efficiency. We use a panel regression analysis to verify the existence of such effects. The results show that grants lead neither to an increase in output (the number of guarantees or the total value of guarantees) nor to the improvement of multiplier or default ratios. We observe the positive impact of grants on the transaction scale and cost efficiency. We continue the discussion on the justification of state intervention in the market and the consequences of the public aid. The research shows that state intervention through public support for guarantee schemes has both advantages and disadvantages. In order to enhance the efficiency of the guarantee schemes, government intervention on behalf of private investors should be limited. Our research has some limitations. The sample does not cover all the functioning guarantee funds, as there were financial statements that were not available and our study does not concern the whole EU budget period (2014-2020). The consequences of public financial aid for organizations providing guarantees for SMEs are rarely studied, therefore, the paper fills the research gap on the influence of public aid on guarantee funds functioning in European Union countries.


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