Frayman, David;
(2025)
Do public loans matter: measuring allocation,
additionality and heterogeneity.
Doctoral thesis (Ph.D), UCL (University College London).
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Abstract
Despite the scale of finance disbursed to firms annually, public lending has received only modest empirical attention. Existing work has examined the effects of de-risking interventions that support private lending, and not the larger share of public lending that is made directly to firms. As a result, we have an imprecise picture of where finance goes and minimal evidence about its effects on the firms that receive it. This thesis addresses this gap in relation to a major programme of public lending in the European Union (the European Fund for Strategic Investments (EFSI)). It examines who and what was financed by loans, whether they induced firms to make additional investments, and the interaction between these things (how did policy effects vary). This relied on the collection from original loan documentation of a unique dataset on the recipients and investments financed. It finds evidence that the policy goals of generating additional private investment and directing investment towards societal challenges, notably the climate crisis, were successful. Using a difference-in-differences approach that locates control firms who follow similar dynamics of investment demand, the additionality of large public loans is estimated for the first time. Their effect on firm investment is very notable – an estimated additional growth in fixed assets of approximately 12 percentage points as a result of receiving a loan under EFSI. This shows loans were not merely substitutes for private finance, and is evidence of constraints on long-term borrowing amongst large firms that can be attributed to maturity rationing. This thesis also provides entirely novel evidence on heterogeneity in the effects of public lending. This did not conform to theoretical expectations, and there is some suggestive evidence of a potential trade-off between the societal and economic goals of public lending.
| Type: | Thesis (Doctoral) |
|---|---|
| Qualification: | Ph.D |
| Title: | Do public loans matter: measuring allocation, additionality and heterogeneity |
| Language: | English |
| Additional information: | Copyright © The Author 2025. Original content in this thesis is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY-NC 4.0) Licence (https://creativecommons.org/licenses/by-nc/4.0/). Any third-party copyright material present remains the property of its respective owner(s) and is licensed under its existing terms. Access may initially be restricted at the author’s request. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10203798 |
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