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Regional Determinants of Small Firm Loans Under the U.K. Loan Guarantee Scheme

Regional Determinants of Small Firm Loans Under the U.K. Loan Guarantee Scheme The Loan Guarantee Scheme was initiated in 1981 in order to alleviate a perceived constraint in the ability of small firms to secure bank finance due to a lack of collateral. This paper shows that a national small firms support scheme has, at the point of delivery, had quite different coverage across regions. Briefly, the initial evidence suggests that the Northern regions of England have been the major net beneficiaries of the scheme, primarily at the expense of Northern Ireland and Scotland. Further analysis identified house prices as the single most important determinant of loan size, acting via a collateral effect. On loan numbers and value, fixed regional effects were dominant particularly in the South East and North West. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Regional Determinants of Small Firm Loans Under the U.K. Loan Guarantee Scheme

Cowling, Marc
Small Business Economics , Volume 11 (2) – Oct 6, 2004
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References (29)

Publisher
Springer Journals
Copyright
Copyright © 1998 by Kluwer Academic Publishers
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
DOI
10.1023/A:1007956403565
Publisher site
See Article on Publisher Site

Abstract

The Loan Guarantee Scheme was initiated in 1981 in order to alleviate a perceived constraint in the ability of small firms to secure bank finance due to a lack of collateral. This paper shows that a national small firms support scheme has, at the point of delivery, had quite different coverage across regions. Briefly, the initial evidence suggests that the Northern regions of England have been the major net beneficiaries of the scheme, primarily at the expense of Northern Ireland and Scotland. Further analysis identified house prices as the single most important determinant of loan size, acting via a collateral effect. On loan numbers and value, fixed regional effects were dominant particularly in the South East and North West.

Journal

Small Business Economics – Springer Journals

Published: Oct 6, 2004

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