An Empirical Study on the Performance of public Financing for Small Business in Korea

Credit guarantee schemes for small business financing have been one of the most important public support programs to develop the regional economies in many countries. Even if the systems as well as the governance for each program are different in detail, most of theorists and government officials supported the economic necessity and the effective performance.

Most empirical models base on the incremental or marginal approaches to analyze the performance or productivity of the public financing using input-output model such as Data Envelopment Analysis (DEA) or cost-benefit approaches. These kinds of approaches may prove the effective performance, but not negatively. Thus, the objective of the research is to investigate whether the public financing support such as credit guarantee is ‘really’ effective. In order to analyze this effectiveness of credit guarantees, the paper shall differentiate why to support with how to support. To compare these questions, the paper shall utilize two sets of approaches toward the public financing system and its governance.