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Public guarantees and credit additionality during the Covid-19 pandemic

Giuseppe Cascarino (), Raffaele Gallo, Francesco Palazzo and Enrico Sette

No 172, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: We study the public loan guarantee programs implemented in Italy in the aftermath of the Covid-19 pandemic. Guided by a theoretical model and relying on a unique loan-level dataset covering the period between December 2019 and March 2021, we quantify to what extent public guarantees created additional credit across programs with different coverage ratios and over time. We also document that bank capitalization affected additionality for loans with lower coverage, in which banks have more skin in the game. In contrast, the additionality of the public guarantees varied very little across firms with different levels of risk, liquidity, and size.

Keywords: public loan guarantees; credit additionality; bank capital; pandemic. (search for similar items in EconPapers)
JEL-codes: G21 G24 (search for similar items in EconPapers)
Pages: 85
Date: 2022-03
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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