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Partial Credit Guarantees and Firm Performance: Evidence from the Colombian National Guarantee Fund

Irani Arraiz, Marcela Meléndez Arjona and Rodolfo Stucchi

No 4089, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper studies the effect of government-backed partial credit guarantees on firms' performance. These guarantees are automatically granted to firms without enough collateral in order to lift their credit constraints. We put together a panel, covering the period 1997-2007, that combines data from DANE's Annual Manufacturing Survey; DIAN's export and import information; and firm-level records from the National Guarantee Fund (NGF), the government agency in charge of implementing this policy. Using propensity score matching and difference-in-differences, we found that firms that gain access to credit backed by the NGF are able to grow in terms of both output and employment. However, we did not find any effect on productivity, wages, or investment. These results suggest that firms use the new funds as working capital to grow their businesses rather than for investment in new durable goods that increase their capital stock.

Keywords: Partial credit guarantee; access to credit; firm growth; job creation; productivity; SME; SMEs; PYMES; small and medium size enterprises; impact evaluation; evaluación de impacto; development effectiveness; efectividad en el desarrollo; productividad (search for similar items in EconPapers)
JEL-codes: H43 L25 O12 O54 (search for similar items in EconPapers)
Date: 2012-09
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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