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Sustainability 2017, 9(12), 2293; doi:10.3390/su9122293

Effects of Soft Loans and Credit Guarantees on Performance of Supported Firms: Evidence from the Czech Public Programme START

Department of Entrepreneurship, University of Economics in Prague, W. Churchill Sq. 1938/4, 130 67 Prague 3, Czech Republic
Received: 15 November 2017 / Revised: 7 December 2017 / Accepted: 8 December 2017 / Published: 10 December 2017
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
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Abstract

The purpose of this article was to conduct an empirical evaluation of the Czech public programme START, which was funded from the European Regional Development Fund. The programme lasted from 2007–2011, and supported new entrepreneurs through the zero interest soft loans and credit guarantees. The counterfactual analysis (using three matching techniques: propensity score, nearest neighbour, and kernel) was conducted on the firm level and investigated the changes in financial performance (net profits, return on assets (ROA), return on equity (ROE), sales, assets turnover, and debt ratio) of the supported firms four years after the end of intervention. The obtained findings could not support the hypothesis assuming a positive impact of the programme on the firm’s performance. On the contrary, supported companies reported on average lower sales and lower return on assets, when compared to the control group. The remaining variables could not prove any statistically significant impact of the programme. Indicators measuring firm’s profitability (net profit, return on assets, and return on equity) suggested a negative influence of the programme and the variable representing debt ratio further indicated that firms that were supported by the programme reported on average higher debt ratio in comparison with the control group. Several policy implications are discussed in the study. View Full-Text
Keywords: Entrepreneurship Policy Evaluation; Public Start-up Programme; Soft Loans; Credit Guarantees; Counterfactual Analysis; the Czech Republic Entrepreneurship Policy Evaluation; Public Start-up Programme; Soft Loans; Credit Guarantees; Counterfactual Analysis; the Czech Republic
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Dvouletý, O. Effects of Soft Loans and Credit Guarantees on Performance of Supported Firms: Evidence from the Czech Public Programme START. Sustainability 2017, 9, 2293.

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