The effects of mutual guarantee consortia on the quality of bank lending

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The effects of mutual guarantee consortia on the quality of bank lending

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Columba, Francesco
Gambacorta, Leonardo
Mistrulli, Paolo Emilio

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Abstract

In this paper we investigate whether or not mutual guarantee consortia (MGC), a financial institution well developed in Italy, alleviate the difficulties that Small and Medium Enterprises (SMEs) face when they ask for a bank loan. We find that the probability of a small firm affiliated to a MGC of going into default is lower than that of firms not affiliated to such a consortium. These results indicate that MGCs improve the ability of banks to screen and monitor small firms.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17052.

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Date of creation: Apr 2009
Date of revision: Mar 2009
Handle: RePEc:pra:mprapa:17052

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Find related papers by JEL classification:
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
G30 - Financial Economics - - Corporate Finance and Governance - - - General
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-09-05 (All new papers)
NEP-BAN-2009-09-05 (Banking)
NEP-RMG-2009-09-05 (Risk Management)

References listed on IDEAS
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Armendariz de Aghion, Beatriz, 1999. "On the design of a credit agreement with peer monitoring," Journal of Development Economics, Elsevier, vol. 60(1), pages 79-104, October. [Downloadable!] (restricted)
Berger, Allen N. & Udell, Gregory F., 2006. "A more complete conceptual framework for SME finance," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2945-2966, November. [Downloadable!] (restricted)
Bolton, Patrick & Scharfstein, David S, 1996. "Optimal Debt Structure and the Number of Creditors," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 1-25, February. [Downloadable!] (restricted)

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This page was last updated on 2009-11-26.

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