Can Public Credit Schemes Improve Access to Finance for Small Businesses? Evidence from Indonesia

Examining one of the world’s largest public business support programs, this paper studies how subsidized credit and partial credit guarantees shape access to finance for micro and small businesses in Indonesia. The analysis uses administrative data on more than 8.4 million borrowers and unique quantitative and qualitative data to show that subsidized credit can enable firms to access formal credit for the first time and boost financial inclusion. However, subsidized credit does not alleviate longer-term credit constraints by serving as a stepping stone to unsubsidized commercial credit in this context. The results highlight the challenge of reaching borrowers without collateral, even in programs that explicitly target them using instruments such as partial credit guarantees. The paper sheds light on how public credit schemes for small businesses can be designed to optimize inclusiveness and additionality.

Bibliographic Details

Main Authors:	Alibha, Salman, Johnson, Hillary C., Niang, Cecile Thioro, Strobbe, Francesco
Format:	Working Paper biblioteca
Language:	English en_US
Published:	Washington, DC: World Bank 2024-09-06
Subjects:	GOVERNMENT CREDIT PROGRAMS, SUBSIDIZED CREDIT, PARTIAL CREDIT GUARANTEES, MICRO-SMALL AND MEDIUM ENTERPRISES, FINANCIAL INCLUSION, INTEREST RATES, INDUSTRY, INNOVATION AND INFRASTRUCTURE, SDG 9,
Online Access:	http://documents.worldbank.org/curated/en/099257009042435538/IDU12698ff2e1c4be1400518dec1e349ef771a96 https://hdl.handle.net/10986/42127
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