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Transforming Credit Guarantee Schemes with Distributed Ledger Technology

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Listed:
  • Sabrina Leo
  • Andrea Delle Foglie
  • Luca Barbaro
  • Edoardo Marangone
  • Ida Claudia Panetta
  • Claudio Di Ciccio

Abstract

Credit Guarantee Schemes (CGSs) are crucial in mitigating SMEs' financial constraints. However, they are renownedly affected by critical shortcomings, such as a lack of financial sustainability and operational efficiency. Distributed Ledger Technologies (DLTs) have shown significant revolutionary influence in several sectors, including finance and banking, thanks to the full operational traceability they bring alongside verifiable computation. Nevertheless, the potential synergy between DLTs and CGSs has not been thoroughly investigated yet. This paper proposes a comprehensive framework to utilise DLTs, particularly blockchain technologies, in CGS processes to improve operational efficiency and effectiveness. To this end, we compare key architectural characteristics considering access level, governance structure, and consensus method, to examine their fit with CGS processes. We believe this study can guide policymakers and stakeholders, thereby stimulating further innovation in this promising field.

Suggested Citation

  • Sabrina Leo & Andrea Delle Foglie & Luca Barbaro & Edoardo Marangone & Ida Claudia Panetta & Claudio Di Ciccio, 2024. "Transforming Credit Guarantee Schemes with Distributed Ledger Technology," Papers 2404.19555, arXiv.org.
    • Handle: RePEc:arx:papers:2404.19555
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    References listed on IDEAS

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    1. Félix Corredera-Catalán & Filippo Pietro & Antonio Trujillo-Ponce, 2021. "Post-COVID-19 SME financing constraints and the credit guarantee scheme solution in Spain," Journal of Banking Regulation, Palgrave Macmillan, vol. 22(3), pages 250-260, September.
    2. Concepción de la Fuente-Cabrero & Mónica de Castro-Pardo & Rosa Santero-Sánchez & Pilar Laguna-Sánchez, 2019. "The Role of Mutual Guarantee Institutions in the Financial Sustainability of New Family-Owned Small Businesses," Sustainability, MDPI, vol. 11(22), pages 1-15, November.
    3. José Parra Moyano & Omri Ross, 2017. "KYC Optimization Using Distributed Ledger Technology," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 59(6), pages 411-423, December.
    4. Meghana Ayyagari & Asli Demirguc-Kunt & Vojislav Maksimovic, 2014. "Who creates jobs in developing countries?," Small Business Economics, Springer, vol. 43(1), pages 75-99, June.
    5. Paola Leone & Ida C. Panetta & Pasqualina Porretta, 2013. "Credit Guarantee Institutions, Performance and Risk Analysis: An Experimental Scoring," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Joseph Falzon (ed.), Bank Stability, Sovereign Debt and Derivatives, chapter 5, pages 115-160, Palgrave Macmillan.
    6. Lilas Demmou & Guido Franco, 2021. "From hibernation to reallocation: Loan guarantees and their implications for post-COVID-19 productivity," OECD Economics Department Working Papers 1687, OECD Publishing.
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