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dc.titleFormal Credit and SME Performance: Reviewing Evidence from Impact Evaluations
dc.contributor.authorVlaicu, Razvan
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageLatin America
dc.date.available2026-08-25T00:08:00
dc.date.issue2026-08-25T00:08:00
dc.description.abstractThis paper reviews the impact evaluation evidence on how expanding formal credit affects small and medium enterprise (SME) performance, focusing on developing countries, particularly Latin America, while using evidence from advanced economies to sharpen mechanisms and external validity. Across the core evidence base, the meta-analytic mean effects of formal loans are economically meaningful: employment rises by about 12% on average, sales by about 18%, and profits by about 18%, albeit with substantial heterogeneity across settings, programs, and outcome horizons. The effects are larger in some large-scale public interventions and in programs explicitly targeting constrained firms but smaller or statistically indistinguishable from zero in others. Taken together, the evidence supports the view that relaxing financial constraints can raise SME scale and performance, but it also underscores that credit expansions are not automatically welfare improving, can create distributional and competitive spillovers, and are sensitive to program design, targeting, and local financial architecture.
dc.format.extent40
dc.identifier.doihttp://dx.doi.org/10.18235/0014476
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Formal-Credit-and-SME-Performance-Reviewing-Evidence-from-Impact-Evaluations.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectSmall Business
dc.subjectImpact Evaluation
dc.subjectCredit
dc.subjectBank Loan
dc.subjectFinance
dc.subjectLabor
dc.subjectInvestment
dc.subjectDevelopment Bank
dc.subjectCredit Line
dc.subject.jelcodeE22 - Investment • Capital • Intangible Capital • Capacity
dc.subject.jelcodeE24 - Employment • Unemployment • Wages • Intergenerational Income Distribution • Aggregate Human Capital • Aggregate Labor Productivity
dc.subject.jelcodeE50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
dc.subject.jelcodeG21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages
dc.subject.keywordscredit access;SME performance;Developing countires
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01855
idb.operationRG-T4598
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