Extent to which procurement awards increase firm credit (new lending vs. credit stock)

Ascertain the extent to which public procurement awards translate into increased firm credit availability, with particular emphasis on measuring the effect on new lending operations as opposed to changes in the stock of credit.

Background

Public procurement constitutes a significant share of government spending and is often used to support firm liquidity and investment. While prior studies frequently evaluate impacts using changes in credit stock, new lending operations can provide a more precise measure of immediate liquidity effects.

The paper highlights that, at the time of writing, the relationship between procurement awards and increased credit availability—especially when focusing on new lending rather than credit stock—has not been definitively established in the literature, motivating the study’s empirical analysis using Spanish data and the NGEU context.