Partial Credit Guarantees and Firm Performance: Evidence from the Colombian National Guarantee Fund
AbstractThis 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 InfoPaper provided by Inter-American Development Bank, Office of Evaluation and Oversight (OVE) in its series OVE Working Papers with number 0212.
Length: 17 pages
Date of creation: Oct 2012
Date of revision:
Partial credit guarantee; access to credit; firm growth; job creation; productivity;
Other versions of this item:
- Irani Arráiz & Marcela Meléndez Arjona & Rodolfo Stucchi, 2012. "Partial Credit Guarantees and Firm Performance: Evidence from the Colombian National Guarantee Fund," IDB Publications 77498, Inter-American Development Bank.
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-27 (All new papers)
- NEP-BEC-2012-10-27 (Business Economics)
- NEP-EFF-2012-10-27 (Efficiency & Productivity)
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