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A survival analysis of public guaranteed loans: Does financial intermediary matter?

Stefano Caselli, Guido Corbetta, Doriana Cucinelli and Monica Rossolini

Journal of Financial Stability, 2021, vol. 54, issue C

Abstract: This paper investigates the risk of failure of loans guaranteed by public credit guarantee schemes. We analyse the determinants of the time to default of approximately 15,000 loans guaranteed by the Italian Central Guarantee Fund between 2007 and 2009. Using the Cox proportional hazards model, we test the role of the financial intermediary that requests the guarantee on a firm’s behalf, while distinguishing between banks and mutual guarantee institutions (MGIs) and controlling for a set of variables that characterise each guaranteed loan. The findings confirm that loans are more likely to default when a bank—rather than an MGI—is involved in the guarantee process. Considering some elements (e.g. age, size and sector) that affect opacity among small- and medium-sized enterprises (SMEs), banks seem to perform better than MGIs in screening and monitoring loans requested by firms in the manufacturing sector.

Keywords: Credit risk; Collateral; Mutual guarantee institution; Bank; State-fund guarantee (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.jfs.2021.100880

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