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Partial Credit Guarantees and Firm Performance: Evidence from the Colombian National Guarantee Fund

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  • Irani Arráiz

    ()
    (Multilateral Investment Fund, Inter-American Development Bank, Washington, USA)

  • Marcela Melendez
  • Rodolfo Stucchi

    ()
    (Inter-American Development Bank, Washington, USA)

Abstract

This paper studies the effect of government-backed partial credit guarantees on firms’ performance. These guarantees are automatically granted to firms without enough collateral in order to lift their credit constraints. We put together a panel, covering the period 1997-2007, that combines data from DANE's Annual Manufacturing Survey; DIAN's export and import information; and firm-level records from the National Guarantee Fund (NGF), the government agency in charge of implementing this policy. Using propensity score matching and difference-in-differences, we found that firms that gain access to credit backed by the NGF are able to grow in terms of both output and employment. However, we did not find any effect on productivity, wages, or investment. These results suggest that firms use the new funds as working capital to grow their businesses rather than for investment in new durable goods that increase their capital stock.

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Bibliographic Info

Paper provided by Inter-American Development Bank, Office of Evaluation and Oversight (OVE) in its series OVE Working Papers with number 0212.

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Length: 17 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:idb:ovewps:0212

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Related research

Keywords: Partial credit guarantee; access to credit; firm growth; job creation; productivity;

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