Evaluating the impact of the state support programs on the firm-level outcomes in Georgia.

The objective of this study is to evaluate the impact of the state support program of SMEs on the firm-level outcomes in Georgia. The Georgian government’s SME financing procedure offers just such a unique opportunity for a quasi-natural experiment, which allows the credible use of local/nonparametric regression discontinuity methodology (RDD). Since 2015, the government of Georgia has been financing SME proposals using a uniform selection methodology by which SMEs get funding in the case their proposed business plan is scored above a certain threshold. This threshold creates a separation between the two groups of applicants, those who receive financing and those who do not, around which the applicants are of very similar quality and characteristics. These two groups of similar SMEs will be compared using local RDD methodology. Furthermore, the aim of this research is to study the spillover and external effect of the program on the business sector development using administrative business sector survey data.