Partial credit guarantees: Principles and practice
Partial credit guarantee schemes have experienced renewed interest from governments keen to promote financial access for small enterprises, not least as a response to the credit crunch in advanced economies. While the market can find uses for partial credit guarantees, the attractions for public policy can be illusory: indeed their most attractive feature for myopic politicians may be the ease with which the true cost of guarantees can be understated, at least at the outset. In practice, the actual fiscal cost of existing schemes has varied widely across countries and has represented a high per dollar subsidy in some cases. Despite the recent application of some innovative techniques, the social benefit of such schemes has proved difficult to estimate, not least because their goals have been vague. Operational design has influenced the cost and apparent effectiveness of different schemes and has also varied widely. Clear and precise goals, against which performance is regularly monitored, realistic pricing verified by consistent and transparent accounting, and attention to the incentive features of operational design, especially for the intermediaries, are among the prerequisites for such schemes to have a good chance of truly achieving improvements in social welfare.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Claire Lelarge & David Sraer & David Thesmar, 2010. "Entrepreneurship and Credit Constraints: Evidence from a French Loan Guarantee Program," NBER Chapters, in: International Differences in Entrepreneurship, pages 243-273 National Bureau of Economic Research, Inc.
- repec:dgr:uvatin:20090019 is not listed on IDEAS
- Mody, Ashoka & Patro, Dilip K, 1996. "Valuing and Accounting for Loan Guarantees," World Bank Research Observer, World Bank Group, vol. 11(1), pages 119-42, February.
- Demirgüç-Kunt, A. & Beck, T.H.L. & Honohan, P., 2008. "Finance for all? : Policies and pitfalls in expanding access," Other publications TiSEM aec73d3a-d6eb-457f-9182-3, Tilburg University, School of Economics and Management.
- Blanchflower, David G & Oswald, Andrew J, 1998.
"What Makes an Entrepreneur?,"
Journal of Labor Economics,
University of Chicago Press, vol. 16(1), pages 26-60, January.
- Allen N. Berger & W. Scott Frame & Nathan H. Miller, 2002.
"Credit scoring and the availability, price, and risk of small business credit,"
Finance and Economics Discussion Series
2002-26, Board of Governors of the Federal Reserve System (U.S.).
- Berger, Allen N & Frame, W Scott & Miller, Nathan H, 2005. "Credit Scoring and the Availability, Price, and Risk of Small Business Credit," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(2), pages 191-222, April.
- Allen N. Berger & W. Scott Frame & Nathan H. Miller, 2002. "Credit scoring and the availability, price, and risk of small business credit," Working Paper 2002-6, Federal Reserve Bank of Atlanta.
- de la Torre, Augusto & Gozzi, Juan Carlos & Schmukler, Sergio L., 2007. "Innovative experiences in access to finance : market friendly roles for the visible hand ?," Policy Research Working Paper Series 4326, The World Bank.
- Zia, Bilal H., 2008. "Export incentives, financial constraints, and the (mis)allocation of credit: Micro-level evidence from subsidized export loans," Journal of Financial Economics, Elsevier, vol. 87(2), pages 498-527, February.
- Salvatore Zecchini & Marco Ventura, 2006. "Public Credit Guarantees and SME Finance," ISAE Working Papers 73, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
- de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2007.
"Returns to Capital in Microenterprises: Evidence from a Field Experiment,"
IZA Discussion Papers
2934, Institute for the Study of Labor (IZA).
- Suresh de Mel & David McKenzie & Christopher Woodruff, 2008. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1329-1372, November.
- de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2007. "Returns to capital in microenterprises : evidence from a field experiment," Policy Research Working Paper Series 4230, The World Bank.
- Ben R. Craig & William E. Jackson, III & James B. Thomson, 2007. "On government intervention in the small-firm credit market and its effect on economic performance," Working Paper 0702, Federal Reserve Bank of Cleveland.
- Gale, William G, 1991.
"Economic Effects of Federal Credit Programs,"
American Economic Review,
American Economic Association, vol. 81(1), pages 133-52, March.
- Riding, Allan L. & HainesJR., George, 2001. "Loan guarantees: Costs of default and benefits to small firms," Journal of Business Venturing, Elsevier, vol. 16(6), pages 595-612, November.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Richard K. Green & Susan M. Wachter, 2005.
"The American Mortgage in Historical and International Context,"
Journal of Economic Perspectives,
American Economic Association, vol. 19(4), pages 93-114, Fall.
- Richard K. Green & Susan M. Wachter, 2005. "The American Mortgage in Historical and International Context," Working Paper 9094, USC Lusk Center for Real Estate.
- Besanko, David & Thakor, Anjan V, 1987. "Collateral and Rationing: Sorting Equilibria in Monopolistic and Competitive Credit Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 671-89, October.
- Huizinga, Harry, 1997. "Are there synergies between World Bank partial credit guarantees and private lending?," Policy Research Working Paper Series 1802, The World Bank.
- Gyutaeg Oh & Jae-Ha Park, 2006. "Creation of a regional credit guarantee mechanism in As," BIS Papers chapters, in: Bank for International Settlements (ed.), Asian bond markets: issues and prospects, volume 30, pages 224-240 Bank for International Settlements.
- José Miguel Benavente & Alexander Galetovic & Ricardo Sanhueza, 2006. "Fogape: an economic analysis," Working Papers wp222, University of Chile, Department of Economics.
- Cowling, Marc & Mitchell, Peter, 2003. " Is the Small Firms Loan Guarantee Scheme Hazardous for Banks or Helpful to Small Business?," Small Business Economics, Springer, vol. 21(1), pages 63-71, August.
- Besley, Timothy, 1994.
"How Do Market Failures Justify Interventions in Rural Credit Markets?,"
World Bank Research Observer,
World Bank Group, vol. 9(1), pages 27-47, January.
- Besley, T., 1992. "How Do Market Failures Justify Interventions in Rural Credit Markets?," Papers 162, Princeton, Woodrow Wilson School - Development Studies.
- David de Meza, 2002. "Overlending?," Economic Journal, Royal Economic Society, vol. 112(477), pages F17-F31, February.
- Allan Riding & Judith Madill & George Haines, 2007. "Incrementality of SME Loan Guarantees," Small Business Economics, Springer, vol. 29(1), pages 47-61, June.
- repec:ner:tilbur:urn:nbn:nl:ui:12-3508393 is not listed on IDEAS
- de Meza, David & Webb, David C, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 281-92, May.
When requesting a correction, please mention this item's handle: RePEc:eee:finsta:v:6:y:2010:i:1:p:1-9. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.