Frayman, David;
(2024)
Banking on the State: Does State Investment Bank Lending Increase Firm Investment?
(UCL Institute for Innovation and Public Purpose (IIPP) Working Paper Series
2024-21).
UCL Institute for Innovation and Public Purpose (IIPP): London, UK.
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Abstract
State-backed institutions disburse substantial volumes of loans to the private sector to finance investment. In some major economies, this accounts for over 20% of bank credit for investment. Despite this, the microeconomic effects of state investment bank lending have received limited empirical attention. This paper examines the impact of a major lending programme of in the European Union: the European Fund for Strategic Investments (EFSI). Using a unique dataset on loan recipients, it estimates the effect of lending on firm investment through a difference-in-differences design, matching recipients with controls expected to follow the same dynamics of investment demand. Receiving an EIB loan under EFSI is found to have caused substantial additional growth in fixed assets, averaging approximately 12 percentage points during the post-treatment period. This is the first causal evidence on the additionality of large state investment bank loans made directly to firms.
| Type: | Working / discussion paper |
|---|---|
| Title: | Banking on the State: Does State Investment Bank Lending Increase Firm Investment? |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | https://www.ucl.ac.uk/bartlett/public-purpose/publ... |
| Language: | English |
| Additional information: | This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10202866 |
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