COVID-19 and public credit guarantees: a policy assessment

Cecilia Dassatti ()
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Cecilia Dassatti: Banco Central del Uruguay

No 2023005, Documentos de trabajo from Banco Central del Uruguay

Abstract: The global business shutdown derived from the COVID shock posed the challenge for policymakers of designing a quick an effective response to cushion the negative impact of the pandemic on the activity of small firms. Using granular data on loans and guarantees, I study the impact of a Public Credit Guarantee Scheme implemented in Uruguay. The results of the estimations suggest that the policy effectively reached the targeted industries, offering evidence in favor of the private financial sector operating as a conduit of government-backed liquidity for microsmall- and medium-sized firms. I also find empirical evidence suggesting a mild opportunistic behavior through substitution of illiquid guarantees and about the role of state-owned banks in credit provision during the pandemic.

Keywords: COVID-19; public credit guarantee; state-owned banks (search for similar items in EconPapers)
JEL-codes: E65 G21 G28 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2023
New Economics Papers: this item is included in nep-cfn
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