Investment subsidies and SME performance under staggered treatment: Evidence from matched difference-in-differences

Investment subsidies and SME performance under staggered treatment: Evidence from matched difference-in-differences | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Investment subsidies and SME performance under staggered treatment: Evidence from matched difference-in-differences Eugeni Gil-Ocana, Ana Garcia-Bernabeu, Pablo De Pedraza This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9498631/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Monitoring of support schemes for small and medium-sized enterprises is essential to assess policy effectiveness and the efficient use of public resources. This paper evaluates the causal impact of investment subsidies on SME performance under non-random treatment assignment and staggered policy implementation. The empirical strategy combines propensity score matching, to construct a comparable control group, with a doubly robust estimator, which identifies group-time average treatment effects while accounting for treatment heterogeneity across cohorts and periods. The framework is implemented using administrative subsidy records from the Spanish National Subsidies Database (BDNS) and firm-level accounting data from SABI for the period 2018--2024. Results indicate that subsidies generate a positive and significant effect on fixed asset accumulation, with no significant short-run effects on revenue, employment, or financial ratios. Heterogeneity analysis shows that effects are concentrated among micro-enterprises and increase monotonically with subsidy intensity Plain English Summary. Public investment subsidies boost capital investment in small firms, but do not immediately improve sales or jobs for most recipients.We study the effect of Spanish government grants on small and medium-sized enterprises using a rigorous statistical method that accounts for the fact that firms receive subsidies at different points in time. We find that subsidies lead to a significant increase in fixed assets but have no significant short-run effect on revenue, employment, or financial health for the average recipient. However,the smallest firms, those with fewer than ten employees, do show broader benefits,including employment growth, and larger grants generate stronger effects. These findings suggest that policymakers designing SME support programmes should pay close attention to firm size and grant magnitude when allocating public funds, as blanket interventions may be ineffective for larger firms while provingtransformative for the smallest ones. Public subsidies SME policy evaluation Causal inference Matching methods Difference-in-differences Staggered treatment effects Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9498631","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":635425772,"identity":"91b27c23-764a-4082-8cff-b30957e06835","order_by":0,"name":"Eugeni Gil-Ocana","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA5ElEQVRIiWNgGAWjYFACxsYDQFKO4QAJWhpAio2BWhgbiNYE0pLYQLQWfv7FDQc+1Nil9x1vfv7g4x6GxO0SCYwPf+DRIjnjYcPBGceSc2eeOWbYOOMZQ+LOGQnMxjx4tBjcONhwmLeBOXfDjRzGZp4DDIkbzhxgk8bnMHuIlvp0AyQt7D/xOcyAvxGk5XACQsvxBjYGfA6TuMEI8stxQ5BfZs44IGG8s72xWRqfFv7+4w8ffKipluc73vzgw4cDNrLbmZkPfsTnMAaJBFQugwHB+OE/gCZggF/9KBgFo2AUjEAAADcmWpIdsaaIAAAAAElFTkSuQmCC","orcid":"","institution":"Universitat Politècnica de València","correspondingAuthor":true,"prefix":"","firstName":"Eugeni","middleName":"","lastName":"Gil-Ocana","suffix":""},{"id":635425777,"identity":"9b7404a5-487f-4abe-8029-a5022f59117d","order_by":1,"name":"Ana Garcia-Bernabeu","email":"","orcid":"","institution":"Universitat Politècnica de València","correspondingAuthor":false,"prefix":"","firstName":"Ana","middleName":"","lastName":"Garcia-Bernabeu","suffix":""},{"id":635425780,"identity":"0b66bdb3-133e-4b33-9af6-e3c7be5fc5ef","order_by":2,"name":"Pablo De Pedraza","email":"","orcid":"","institution":"Universitat Politècnica de València","correspondingAuthor":false,"prefix":"","firstName":"Pablo","middleName":"","lastName":"De Pedraza","suffix":""}],"badges":[],"createdAt":"2026-04-22 16:08:14","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9498631/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9498631/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":109205119,"identity":"a9ffb465-c2fc-4208-8d94-7d06d33a3d9a","added_by":"auto","created_at":"2026-05-13 15:03:25","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":5515313,"visible":true,"origin":"","legend":"","description":"","filename":"manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9498631/v1_covered_0ead4e6b-6975-4852-bded-9eaa26e91b4a.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Investment subsidies and SME performance under staggered treatment: Evidence from matched difference-in-differences","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Public subsidies, SME policy evaluation, Causal inference, Matching methods, Difference-in-differences, Staggered treatment effects","lastPublishedDoi":"10.21203/rs.3.rs-9498631/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9498631/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eMonitoring of support schemes for small and medium-sized enterprises is essential to assess policy effectiveness and the efficient use of public resources. This paper evaluates the causal impact of investment subsidies on SME performance under non-random treatment assignment and staggered policy implementation. The empirical strategy combines propensity score matching, to construct a comparable control group, with a doubly robust estimator, which identifies group-time average treatment effects while accounting for treatment heterogeneity across cohorts and periods. The framework is implemented using administrative subsidy records from the Spanish National Subsidies Database (BDNS) and firm-level accounting data from SABI for the period 2018--2024. Results indicate that subsidies generate a positive and significant effect on fixed asset accumulation, with no significant short-run effects on revenue, employment, or financial ratios. Heterogeneity analysis shows that effects are concentrated among micro-enterprises and increase monotonically with subsidy intensity\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003ePlain English Summary. \u003c/strong\u003ePublic investment subsidies boost capital investment in small firms, but do not immediately improve sales or jobs for most recipients.We study the effect of Spanish government grants on small and medium-sized enterprises using a rigorous statistical method that accounts for the fact that firms receive subsidies at different points in time. We find that subsidies lead to a significant increase in fixed assets but have no significant short-run effect on revenue, employment, or financial health for the average recipient. However,the smallest firms, those with fewer than ten employees, do show broader benefits,including employment growth, and larger grants generate stronger effects. 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