Credit constrained firms and government subsidies: evidence from a European Union program

by Eszter Balogh, Adám Banai, Tirupam Goel, Péter Lang, Martin Stancsics, Előd Takáts and Álmos Telegdy
Using rejected subsidy applicants as control group and bank queries to the credit-registry to identify firms that applied for but did not receive a loan, we show that subsidies generate a sizeable incremental impact on asset growth of constrained firms relative to unconstrained businesses.