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Partial credit guarantees and firm performance: evidence from Colombia

Author

Listed:
  • Irani Arráiz
  • Marcela Meléndez
  • Rodolfo Stucchi

Abstract

This paper studies the effect of government-backed partial credit guarantees on firms’ performance in Colombia. These guarantees are automatically granted by the National Guarantee Fund (NGF) to firms without enough collateral to lift their credit constraints. We put together a panel of firms covering the period 1997–2007 that allows us to control for observed and unobserved firm characteristics potentially affecting both the selection of firms into the program and firms’ performance. We find that firms that gain access to credit backed by the NGF were able to grow in terms of both output and employment. However, we do not find any effect on productivity, wages, or investment. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Irani Arráiz & Marcela Meléndez & Rodolfo Stucchi, 2014. "Partial credit guarantees and firm performance: evidence from Colombia," Small Business Economics, Springer, vol. 43(3), pages 711-724, October.
    • Handle: RePEc:kap:sbusec:v:43:y:2014:i:3:p:711-724
    DOI: 10.1007/s11187-014-9558-4
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    More about this item

    Keywords

    Partial credit guarantee; Access to credit; Firm growth; Job creation; Productivity; H43; L25; O12; O54; L26;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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