Bridging Financial Gaps: A Qualitative Literature Review on Government Loan Programs and Small Business Growth under Credit Constraints
DOI:
https://doi.org/10.70142/ijbmel.v3i1.406Keywords:
Small Business Finance, Government Loan Programs, Credit Constraints, SME Growth, Public Lending EffectivenessAbstract
This qualitative literature review examines the role of government loan programs in addressing credit constraints that hinder small business growth. Synthesizing recent empirical studies from Japan, the United States, and the European Union, the review finds that well-targeted public lending initiatives facilitate capital investment, employment expansion, and long-term productivity among financially constrained firms. The evidence highlights that government credit often complements rather than substitutes private lending and serves as a structural mechanism to reduce financial frictions. Program effectiveness is found to depend heavily on institutional design, eligibility targeting, and administrative capacity. The findings underscore the strategic value of sustained public intervention in SME finance, not only during crises but also for long-term economic resilience and inclusive growth
References
Abadie, A. (2005). Semiparametric difference-in-differences estimators. The Review of Economic Studies, 72(1), 1–19.
Almeida, H., & Campello, M. (2007). The Review of Financial Studies, 20(5), 1429–1460.
Amamou, R., Gereben, A., & Wolski, M. (2023). Assessing the impact of the EIB’s intermediated lending to SMEs during funding shocks. Small Business Economics, 60, 975–1007. https://doi.org/10.1007/s11187-021-00570-7
Arellano, C., Bai, Y., & Kehoe, P. J. (2019). Financial frictions and fluctuations in volatility. Journal of Political Economy, 127(5), 2049–2103.
Asdrubali, P., & Signore, S. (2015). The economic impact of EU guarantees on credit to SMEs: Evidence from CESEE countries. European Economy – Discussion Papers 2015 – 002. European Commission.
Bach, L. (2014). Are small businesses worthy of financial aid? Evidence from a French targeted credit program. Review of Finance, 18(3), 877–919. https://doi.org/10.1093/rof/rfs045
Banerjee, A. V., & Duflo, E. (2014). Do firms want to borrow more? Testing credit constraints using a directed lending program. The Review of Economic Studies, 81(2), 572–607. https://doi.org/10.1093/restud/rdt046
Beck, T., Demirgüç-Kunt, A., & Maksimovic, V. (2005). Financial and legal constraints to growth: Does firm size matter? The Journal of Finance, 60(1), 137–177.
Behr, P., Norden, L., & Noth, F. (2013). Financial constraints of private firms and bank lending behavior. Journal of Banking & Finance, 37(9), 3472–3485.
Bertoni, F., Brault, J., Colombo, M. G., Quas, A., & Signore, S. (2019). Econometric study on the impact of EU loan guarantee financial instruments on growth and jobs of SMEs. EIF Working Paper Series 2019/54, European Investment Fund.
Bertoni, F., Colombo, M. G., & Quas, A. (2018). The effects of EU-funded guarantee instruments on the performance of SMEs: Evidence from France. EIF Working Paper Series 2018/52.
Boell, S. K., & Cecez-Kecmanovic, D. (2015). On being ‘systematic’ in literature reviews. Formulating Research Methods for Information Systems, 48(2), 258–264.
Bonfim, D., Custódio, C., & Raposo, C. (2023). Supporting small firms through recessions and recoveries. Journal of Financial Economics, 147(3), 658–688. https://doi.org/10.1016/j.jfineco.2022.09.006
Bradshaw, T. K. (2002). The contribution of small business loan guarantees to economic development. Economic Development Quarterly, 16(4), 360–369.
Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative Research in Psychology, 3(2), 77–101.
Brown, J. D., & Earle, J. S. (2017). Finance and growth at the firm level: Evidence from SBA loans. The Journal of Finance, 72(3), 1039–1080. https://doi.org/10.1111/jofi.12497
Callaway, B., & Sant’Anna, P. H. C. (2021). Difference-in-differences with multiple time periods. Journal of Econometrics, 225(2), 200–230.
Calonico, S., Cattaneo, M. D., & Titiunik, R. (2014). Robust nonparametric confidence intervals for regression-discontinuity designs. Econometrica, 82(6), 2295–2326. https://doi.org/10.3982/ECTA11757
Caselli, S., Corbetta, G., Rossolini, M., & Vecchi, V. (2019). Public credit guarantee schemes and SMEs’ profitability: Evidence from Italy. Journal of Small Business Management, 57(S2), 555–578. https://doi.org/10.1111/jsbm.12502
Clementi, G. L., & Hopenhayn, H. A. (2006). A theory of financing constraints and firm dynamics. The Quarterly Journal of Economics, 121(1), 229–265. https://doi.org/10.1162/qjec.2006.121.1.229
Cooke, A., Smith, D., & Booth, A. (2012). Beyond PICO: The SPIDER tool for qualitative evidence synthesis. Qualitative Health Research, 22(10), 1435–1443.
Cooley, T. F., & Quadrini, V. (2001). Financial markets and firm dynamics. American Economic Review, 91(5), 1286–1310. https://doi.org/10.1257/aer.91.5.1286
Cowling, M. (2010). The role of loan guarantee schemes in alleviating credit rationing in the UK. Journal of Financial Stability, 6(1), 36–44.
Craig, B. R., Jackson III, W. E., & Thomson, J. B. (2007). Small firm finance, credit rationing, and the impact of SBA-guaranteed lending on local economic growth. Journal of Small Business Management, 45(1), 116–132.
Denis, D. J., & Sibilkov, V. (2009). Financial constraints, investment, and the value of cash holdings. The Review of Financial Studies, 23(1), 247–269. https://doi.org/10.1093/rfs/hhp031
Dore, T. E., Okazaki, T., Onishi, K., & Uesugi, I. (2025). Firm growth and financial constraints: Evidence from a policy-based loan program. Small Business Economics, 65, 131–162. https://doi.org/10.1007/s11187-024-00986-0
Farre-Mensa, J., & Ljungqvist, A. (2016). Do measures of financial constraints measure financial constraints? The Review of Financial Studies, 29(2), 271–308. https://doi.org/10.1093/rfs/hhv052
Garmaise, M. J. (2008). Production in entrepreneurial firms: The effects of financial constraints on labor and capital. Review of Financial Studies, 21(2), 543–577.
Gereben, A., Rop, A., Petricek, M., & Winkler, A. (2019). Do IFIs make a difference? The impact of EIB lending support for SMEs in Central and Eastern Europe during the global financial crisis. EIB Working Paper, 2019/09.
Goodman-Bacon, A. (2021). Difference-in-differences with variation in treatment timing. Journal of Econometrics, 225(2), 254–277.
Grace Yulianti, Benardi Benardi, & Seger Santoso. (2024). Peran Ekuitas Swasta dalam Penyelesaian Bank Gagal Pascakrisis Keuangan dan Implikasinya terhadap Stabilitas Keuangan. Jurnal Visi Manajemen, 10(2), 115–122.
https://doi.org/10.56910/jvm.v10i2.554
Guiso, L., Sapienza, P., & Zingales, L. (2004). Does local financial development matter? The Quarterly Journal of Economics, 119(3), 929–969. https://doi.org/10.1162/0033553041502162
Hadlock, C. J., & Pierce, J. R. (2010). New evidence on measuring financial constraints: Moving beyond the KZ index. The Review of Financial Studies, 23(5), 1909–1940. https://doi.org/10.1093/rfs/hhq009
Heitor, A., & Weisbach, M. S. (2004). The cash flow sensitivity of cash. The Journal of Finance, 59, 1777–1804.
Kobe, K., & Schwinn, R. (2018). The small business share of GDP, 1998–2014. U.S. Small Business Administration, Office of Advocacy.
Lelarge, C., Sraer, D., & Thesmar, D. (2010). Entrepreneurship and credit constraints: Evidence from a French loan guarantee program. In J. Lerner & A. Schoar (Eds.), International differences in entrepreneurship (pp. 243–273). University of Chicago Press.
Muhammad Rizal, Ruslaini Ruslaini, & Eri Kusnanto. (2022). Peran Regulasi dalam Mendorong Adopsi Cloud Computing UMKM DKI Jakarta. Journal of Business, Finance, and Economics (JBFE), 3(1), 130–136.
https://doi.org/10.32585/jbfe.v3i1.5707
Ruslaini Ruslaini, & Muhammad Rizal. (2022). Adopsi Cloud Computing UMKM DKI Jakarta: Peran Kesiapan Teknologi dan Pembelajaran Organisasi. Journal of Business, Finance, and Economics (JBFE), 3(1), 45–52.
https://doi.org/10.32585/jbfe.v3i1.5692
Singh, J. (2013). Critical appraisal skills programme. Journal of Pharmacology & Pharmacotherapeutics, 4(1), 76–77.
Snyder, H. (2019). Literature reviews as a research strategy: An overview and guidelines. Journal of Business Research, 104, 333–339.
Uchida, H., & Udell, G. (2019). Banking in Japan: A post global financial crisis perspective. In A. N. Berger, P. Molyneux, & J. O. S. Wilson (Eds.), The Oxford Handbook of Banking (3rd ed.). Oxford University Press.
Uesugi, I., Sakai, K., & Yamashiro, G. M. (2010). The effectiveness of public credit guarantees in the Japanese loan market. Journal of the Japanese and International Economies, 24(4), 457–480.
Whited, T. M., & Wu, G. (2006). Financial constraints risk. The Review of Financial Studies, 19(2), 531–559.
Whittemore, R., & Knafl, K. (2005). The integrative review: Updated methodology. Journal of Advanced Nursing, 52(5), 546–553.
Wilcox, J. A., & Yasuda, Y. (2019). Government guarantees of loans to small businesses: Effects on banks’ risk-taking and non-guaranteed lending. Journal of Financial Intermediation, 37, 45–57.
Yessica Amelia, Kusnanto, E., & Permana, N. (2023). Pengaruh Pengetahuan Keuangan, Sikap dan Kepribadian terhadap Perilaku Manajemen Keuangan Pelaku UMKM. Jurnal Ekobistek, 12(2), 533–538. https://doi.org/10.35134/ekobistek.v12i2.533.
