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Who Gets Publicly Guaranteed Loans? The Effect of Guarantee Fees on Loan Allocation and Pricing

Author

Listed:
  • Ozan Güler

    (CUNEF Universidad)

  • Ilia Samarin

    (National Bank of Belgium, Economics and Research Department)

Abstract

We study how guarantee fees affect lending by exploiting the Belgian COVID-19 loan guarantee program, which charged lower fees to SMEs than to large firms. Using this size-based fee discontinuity in a regression discontinuity design, we show that large firms facing higher fees are more likely to obtain non-guaranteed loans that are cheaper than comparable guaranteed loans. Both banks and firms benefit from avoiding the fee: borrowers pay lower rates, and lenders retain part of the avoided fee as higher returns. Overall, fees discourage guaranteed lending and concentrate guaranteed loans among ex-ante riskier large firms, resulting in higher ex-post defaults.

Suggested Citation

  • Ozan Güler & Ilia Samarin, 2026. "Who Gets Publicly Guaranteed Loans? The Effect of Guarantee Fees on Loan Allocation and Pricing," Working Paper Research 495, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:202608-495
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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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