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

Ozan Güler () and Ilia Samarin ()
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Ozan Güler: CUNEF Universidad
Ilia Samarin: National Bank of Belgium, Economics and Research Department

No 495, Working Paper Research from National Bank of Belgium

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.

Keywords: Public loan guarantees; guarantee fees; bank lending; COVID-19 pandemic DSGE model; Monetary policy; Bayesian learning; Bayesian estimation. (search for similar items in EconPapers)
JEL-codes: G18 G21 H12 H81 (search for similar items in EconPapers)
Pages: 77 pages
Date: 2026-08
New Economics Papers: this item is included in nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:202608-495

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