Guarantee Instrument Obsolete or Future-Oriented?

Rudy Aernoudt

Chapter 4 in New Frontiers in Entrepreneurial Finance Research, 2019, pp 93-117 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Venture capital, business angels, crowdfunding and mezzanine are among the financing instruments considered as sexy and future-oriented. Therefore, they receive a lot of attention from researchers and policymakers. This is in big contrast to the guarantee instrument often considered as an obsolete bureaucratic instrument leading to moral hazard at lenders’ level. Moreover, guarantees are not only linked — as the traditional approach suggests — to credits, but can be a useful instrument, on top of the different co-investment schemes, to boost venture capital. This chapter argues that a guarantee policy should be an integral part of the landscape of financial instruments as it can be very efficient in terms of value for public money and pleads for a renewal of academic research on the matter and ends with concrete research suggestions.

Keywords: Entrepreneurship; Venture Capital; Private Equity; Innovation; Public Policy; Crowdfunding; Incubators; Mini Bonds; Developing Countries; Green Projects (search for similar items in EconPapers)
JEL-codes: G3 L26 (search for similar items in EconPapers)
Date: 2019
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