This paper conducts a meta-analysis of 24 studies evaluating the impact of formal loans on small and medium-sized enterprise performance. Using a Bayesian hierarchical model, the paper estimates that formal loans increase small and medium-sized enterprise employment by 12 percent, sales by 18.3 percent, and profits by 17.6 percent. Subgroup analyses show that the effects of credit on employment are larger when loans are issued by public rather than private banks, and the effects are broadly similar across firm size, country income levels, and guarantee structures. The larger impact of public bank loans suggests that private lenders’ profit-maximizing incentives may not always align with providing funds to the most credit-constrained firms that have the highest returns to capital.
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Reproducible Research Repository (World Bank) | https://reproducibility.worldbank.org |
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Author | Affiliation | |
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Miriam Bruhn | World Bank | mbruhn@worldbank.org |
Johan Ortega | World Bank | jortegahernandez@worldbank.org |
Claudia Ruiz Ortega | World Bank | cruizortega@worldbank.org |
2025-06-26
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World | WLD |
The materials in the reproducibility packages are distributed as they were prepared by the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this event do not necessarily reflect the views of the World Bank, the Executive Directors of the World Bank, or the governments they represent. The World Bank does not guarantee the accuracy of the materials included in the reproducibility package.
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Modified BSD3 | https://opensource.org/license/bsd-3-clause/ |
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Miriam Bruhn | World Bank | mbruhn@worldbank.org |
Reproducibility WBG | World Bank | reproducibility@worldbank.org |
Name | Abbreviation | Affiliation | Role |
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Reproducibility WBG | DIME | World Bank - Development Impact Department | Verification and preparation of metadata |
2025-06-26
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