The Causal Effect of Credit Guarantees for SMEs: Evidence from Italy
AbstractWe 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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Date of creation: Dec 2012
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Financial subsidies; credit constraints; banking;
Other versions of this item:
- Alessio D'Ignazio & Carlo Menon, 2013. "The causal effect of credit guarantees for SMEs: evidence from Italy," Temi di discussione (Economic working papers) 900, Bank of Italy, Economic Research and International Relations Area.
- G2 - Financial Economics - - Financial Institutions and Services
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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