Tailoring government support for SMEs' investment and financial health: balancing advisory services and training programs

Abstract We evaluate the causal impact of personalized business advisory services compared to standardized training for Chilean small and medium-sized enterprises (SMEs). Utilizing a unique administrative dataset integrating agency records with national financial data, we analyze approximately 100 baseline characteristics and financial histories. We employ inverse probability of treatment weighting (IPTW) and post-double selection (PDS) regression to estimate treatment effects on investment, debt, and financial health. Our results show that advisory services generate significantly higher investment value than training, a relative effect comparing two active support modalities. Both programs may generate positive absolute impacts relative to no support, though the absence of an untreated control group precludes estimation of absolute effects. While advisory services are associated with increased post-treatment debt, there is no significant rise in arrears, suggesting that the borrowing is strategic rather than a sign of distress. Furthermore, PDS analysis reveals that female-owned SMEs exhibit more conservative financial behavior, investing and borrowing less. These findings highlight the necessity of tailoring SME support to firm characteristics and gender, and provide causal evidence to guide the allocation of resources between personalized advisory and standardized training modalities.