Assessing the employment effectiveness of small business financing schemes: Some evidence from Israel

Daniel Felsenstein*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

10 Scopus citations

Abstract

This paper presents an empirical assessment of the employment effects of two assistance schemes aimed at improving the accessibility of small businesses to capital. The first scheme is a revolving loan fund operating in two small towns. The second is a capital grant scheme aimed at promoting industrial activity in rural areas. Empirical data relating to the period 1986-89 is analysed for both schemes. The employment effectiveness of the loan fund is analysed via the estimation of cost-per-job indices and the estimation of the 'deadweight' effect, i.e., employment that would have been created even in the absence of the financing scheme. For the grant scheme, the methodology implemented involves the use of regression techniques in order to isolate the effect of the financial assistance on employment generation. The results point to the cost-effectiveness of this form of assistance. From a public policy point of view, the need for targeting these type of schemes (both spatially and sectorally), is stressed.

Original languageAmerican English
Pages (from-to)273-285
Number of pages13
JournalSmall Business Economics
Volume4
Issue number4
DOIs
StatePublished - Dec 1992
Externally publishedYes

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