The Guarantee System in Chile

Gianfranco A. Vento and Antonio La Colla

Chapter 8 in Credit Guarantee Institutions and SME Finance, 2012, pp 244-286 from Palgrave Macmillan

Abstract: Abstract The Chilean production system is dominated by micro and small enterprises with limited access to the financial system and low levels of external banking agent interaction. One of the main causes for the financial exclusion of micro and small enterprises appears to be their lack of collateral. In an attempt to address this critical area and overcome the limits inherent to the public credit support model for SMEs, the Chilean financial system recently introduced the possibility of private intermediaries issuing guarantees.Moreover, Chile is one of the few countries in Latin America whose banking system is required to comply with the Basel II regulations with interesting implications for the type of guarantees that must be issued by third parties in order to reduce the capital requirements of banks with regard to loans granted. Finally, the guarantee system adopted in Chile is based on strong levels of interaction between intermediaries issuing guarantees and the public bodies cooperating with them — that is, contributing the financial resources necessary for guarantees to be granted.

Keywords: Financial Institution; Banking System; Small Enterprise; Large Enterprise; Medium Enterprise (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-36232-1_8

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DOI: 10.1057/9780230362321_8

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