This review considered 1,450 policy evaluations and evidence reviews from the UK and other OECD countries. It found 27 impact evaluations that met the Centre's minimum standards. It is a very small base relative to that available for some other policy areas (e.g. medicine, aspects of international development, education and social policy).
Overall, of the 27 evaluations reviewed, 17 found positive impacts on at least one firm outcome. Seven evaluations found mixed results (at best providing only weak evidence of positive effects, at worst a mix of positive and negative effects). Two evaluations found that the programme didn’t work (had no effect) and one found that the programme might be harmful.
What the evidence showed
- Access to finance programmes had a positive impact on at least one firm outcome (e.g. credit, employment, sales) in 17 out of 27 evaluations.
- Programmes have a positive effect on firm access to debt finance either in terms of the availability of credit or the cost of borrowing (or both). The impact on access to equity finance is mixed (and available evidence limited).
- The impact of policies on investment and assets is mixed.
- There is some evidence that loan guarantees may increase default risk.
- Access to finance had a positive impact on at least one aspect of firm performance (e.g. employment and sales) in 14 out of 17 evaluations.
- However, these overall patterns hide much more mixed results for specific aspects of firm performance, with only half the evaluations typically recording a positive effect when looking at a specific aspect of firm performance (e.g. employment).
Where the evidence was inconclusive
- There is no evidence that programmes targeted at Small and Medium Sized Enterprises are more or less effective than non-targeted programmes. Other targeted programmes (taken as a group) appear to perform slightly less well.
- The overall results for loan guarantees and alternative investment mechanisms are broadly similar. Loan guarantee schemes introduced in response to economic crisis perform somewhat worse than long term development schemes.
- The overall results for public, private or hybrid programmes are broadly similar.
Where there was lack of evidence
- We found very few studies that look at the impact of schemes on both access to finance (direct effect of the scheme) and on the subsequent performance of firms (indirect effects of the scheme).
- While most programmes appear to improve access to finance, there is much weaker evidence that this leads to improved firm performance. This makes it much harder to assess whether access to finance interventions really improve the wider economic outcomes (e.g. productivity, employment) that policymakers care about.
- As with other reviews, we found very few studies that gathered (or had access to) information on scheme costs. As a result, we have very little evidence on the value for money of different interventions.
Below are some key points for policymakers to consider. You can also learn about our methodology and how to get the most out of our reviews by reading our guide.
Key points to consider
- Most programmes do appear to improve access to finance, although the evidence is weak that this in turn leads to improved firm performance. It is therefore hard to assess whether access to finance interventions improve the wider economic outcomes (such as productivity and employment) that policymakers care about.
- The existing evidence base does not provide guidance on how to improve policy effectiveness, or ‘what works better’ in terms of policy design
- This suggests that direct programme outputs (such as loans made or guaranteed) are unlikely to be good indicators of programme impact on wider economic growth.
- Better evaluations should be undertaken to understand the relationship between these programmes and local economic growth, and also around the value for money of different approaches.