Description:
We evaluate the effects of government loan guarantees (GLGs) on small- and medium-sized enterprises’ (SMEs) credit availability, profitability, and expenditure on research and development (R&D) in China, using data of establishing government loan guarantee platforms (GLGPs) and financial statements of firms in the National Equities Exchange and Quotations (NEEQ) from 2005 to 2019. Our findings suggest that establishing GLGPs increases SMEs’ credit availability by significantly increasing the long-term loans obtained by SMEs, while it does not have significant impact on short-term loans. However, establishing GLGPs leads to a decrease in SMEs’ profitability and R&D expenditure. The effects are more pronounced for private SMEs and SMEs with stronger financing constraints