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The causal effect of credit guarantees for SMEs: evidence from Italy

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  • Alessio D'Ignazio

    ()
    (Bank of Italy)

  • Carlo Menon

    ()

Abstract

We evaluate the effectiveness of a partial credit guarantee program implemented in a large Italian region using unique microdata from a broad set of firms. Our results show that the policy was effective to the extent that it resulted in an improved financial condition for the beneficiary firms. While the total amount of bank debt was unaffected, firms showed a significant increase in the long-term component. Furthermore, targeted firms benefited from a substantial decrease in interest rates. On the other hand, there is some evidence that the probability of default increases as a consequence of the treatment, although the effect is only marginally significant. There are, instead, no effects on the real outcomes.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 900.

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Date of creation: Feb 2013
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Handle: RePEc:bdi:wptemi:td_900_13

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Keywords: financial subsidies; credit constraints; banking;

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  1. José Miguel Benavente & Alexander Galetovic & Ricardo Sanhueza, 2006. "Fogape: an economic analysis," Working Papers wp222, University of Chile, Department of Economics.
  2. Paolo Emilio Mistrulli & Valerio Vacca & Gennaro Corbisiero & Silvia del Prete & Luciano Esposito & Marco Gallo & Mariano Graziano & Maurizio Lozzi & Vincenzo Maffione & Daniele Marangoni & Andrea Mig, 2011. "Mutual Guarantee Institutions (MGIs) and small business credit during the crisis," Questioni di Economia e Finanza (Occasional Papers) 105, Bank of Italy, Economic Research and International Relations Area.
  3. C. Lelarge & D. Sraer & D. Thesmar, 2008. "Entrepreurship and Credit Constraints - Evidence from a French Loan Guarantee Program," Documents de Travail de la DESE - Working Papers of the DESE g2008-07, Institut National de la Statistique et des Etudes Economiques, DESE.
  4. Barone, Guglielmo & Felici, Roberto & Pagnini, Marcello, 2011. "Switching costs in local credit markets," International Journal of Industrial Organization, Elsevier, vol. 29(6), pages 694-704.
  5. Francesco Columba & Leonardo Gambacorta & Paolo Emilio Mistrulli, 2009. "Mutual guarantee institutions and small business finance," BIS Working Papers 290, Bank for International Settlements.
  6. Salvatore Zecchini & Marco Ventura, 2009. "The impact of public guarantees on credit to SMEs," Small Business Economics, Springer, vol. 32(2), pages 191-206, February.
  7. Bronzini, Raffaello & de Blasio, Guido, 2006. "Evaluating the impact of investment incentives: The case of Italy's Law 488/1992," Journal of Urban Economics, Elsevier, vol. 60(2), pages 327-349, September.
  8. Andrea Brandolini & Matteo Bugamelli & Guglielmo Barone & Antonio Bassanetti & Magda Bianco & Emanuele Breda & Emanuela Ciapanna & Federico Cingano & Francesco D’Amuri & Leandro D’Aurizi, 2009. "Report on trends in the Italian productive system," Questioni di Economia e Finanza (Occasional Papers) 45, Bank of Italy, Economic Research and International Relations Area.
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