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Assessing the Economic Value of Credit Guarantees

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  • Saldaña, Cesar G.

Abstract

This article analyzes how a credit guarantee confers private benefits to creditors and proposes reform policies and related assessment measures in order to make credit guarantee a socially beneficial intermediation instrument. Analysis indicates that the necessary and sufficient conditions for credit guarantee to have positive economic value to creditors include sufficiency of collateral and creditor’s risk aversion. Findings also suggest that guarantee programs have a limited reach, implying a need for continuing subsidies.

Suggested Citation

  • Saldaña, Cesar G., 2000. "Assessing the Economic Value of Credit Guarantees," Philippine Journal of Development JPD 2000 Vol. XXVII No. 1, Philippine Institute for Development Studies.
    • Handle: RePEc:phd:pjdevt:jpd_2000_vol__xxvii_no__1-b
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    File URL: https://www.pids.gov.ph/publication/philippine-journal-of-development/assessing-the-economic-value-of-credit-guarantees
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    References listed on IDEAS

    as
    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    2. Magno, Marife T. & Meyer, Richard L, 1988. "Guarantee Schemes: An alternative to the Supervised Credit Program," Working Papers WP 1988-23, Philippine Institute for Development Studies.
    3. Meyer, Richard L, 1992. "Supporting Rural Non-Farm Enterprises: What Can be Learned from Donor Programs?," Philippine Journal of Development JPD 1992 Vol. XIX No. 2-e, Philippine Institute for Development Studies.
    4. Llanto, Gilberto M., 1989. "Asymmetric Information in Rural Financial Markets and Interlinking of Transactions Through Self-Help Groups," Philippine Journal of Development JPD 1989 Vol. XVI No. 1-e, Philippine Institute for Development Studies.
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    Cited by:

    1. Llanto, Gilberto M. & Geron, Maria Piedad S. & Badiola, Jocelyn Alma R., 2016. "Comprehensive Study on Credit Programs to Smallholders," Discussion Papers DP 2016-48, Philippine Institute for Development Studies.

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    Keywords

    credit program; credit access;

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