Public Credit Guarantees and SME Finance

Salvatore Zecchini and Marco Ventura
Additional contact information
Salvatore Zecchini: University of Tor Vergata, Rome, Italy

No 73, ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY)

Abstract: Difficulties in finding appropriate financing weigh heavily on the ability to grow of Italy’s small enterprises, due to their narrow equity base and limited access to credit markets. The State Fund for guarantees to SMEs is one of the instruments used to overcome such difficulties. This essay provides the first evaluation of the impact of this Fund in terms of ability to increase the availability of credit, reduction of borrowing costs and financial sustainability. Extensive econometric tests have been carried out by comparing the performance of the SMEs that benefited from this guarantee with a control group made out of a sample of comparable firms. The findings confirm the presence of a causal relationship between the State guarantee and the higher debt leverage of guaranteed firms, as well as their lower debt cost. The guarantee instrument has proved to be an effective instrument, although it has had a limited economic impact because of its narrow capital base and selective approach.

Keywords: SME; State-fund guarantee; credit rationing; causal effect; difference-in-difference. (search for similar items in EconPapers)
JEL-codes: G14 G21 G28 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2006-12
New Economics Papers: this item is included in nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://lipari.istat.it/digibib/Working_Papers/WP_73_2006_Ventura.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:isa:wpaper:73

Access Statistics for this paper

More papers in ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY) Contact information at EDIRC.
Bibliographic data for series maintained by Stefania Rossetti ().