The causal effect of credit guarantees for SMEs: evidence from Italy

Alessio D'Ignazio and Carlo Menon ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We evaluate the effectiveness of a partial credit guarantee program implemented in a large Italian region using unique microdata from a broad set of firms. Our results show that the policy was effective to the extent that it resulted in an improved financial condition for the beneficiary firms. While the total amount of bank debt was unaffected, firms showed a significant increase in the long-term component. Furthermore, targeted firms benefited from a substantial decrease in interest rates. On the other hand, there is some evidence that the probability of default increases as a consequence of the treatment, although the effect is only marginally significant. There are, instead, no effects on the real outcomes.

Keywords: financial subsidies; credit constraints; banking (search for similar items in EconPapers)
JEL-codes: G2 H2 O16 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2012-12
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Citations: View citations in EconPapers (4)

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http://eprints.lse.ac.uk/58555/ Open access version. (application/pdf)

Related works:
Working Paper: The causal effect of credit guarantees for SMEs: evidence from Italy (2013)
Working Paper: The Causal Effect of Credit Guarantees for SMEs: Evidence from Italy (2012)
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