Causal Effect of Credit Guarantees for Small‐ and Medium‐Sized Enterprises: Evidence from Italy

Alessio D’Ignazio and Carlo Menon ()
Authors registered in the RePEc Author Service: Alessio D'Ignazio

Scandinavian Journal of Economics, 2020, vol. 122, issue 1, 191-218

Abstract: We evaluate the effectiveness of a partial credit guarantee program, implemented in a large Italian region, that aimed to improve the access to credit of small and medium enterprises. Using unique microdata from a broad set of firms, we show that the policy increased the long‐term loans for beneficiary firms, while the total volume of bank loans was unaffected. Furthermore, targeted firms benefited from a substantial decrease in interest rates. However, there is some evidence that firms are more likely to default as a consequence of the treatment. Conversely, the results do not point to any significant effect on investments.

Date: 2020
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