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Abstract for:

The Causal Effect of Credit Guarantees for SMEs: Evidence from Italy

Alessio  D'Ignazio,  Carlo  Menon,  December 2012
Paper No' SERCDP0123: | Full paper (pdf)
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Keywords: Financial subsidies; credit constraints, banking

JEL Classification: G2; H2; O16

Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: SERC Discussion Papers
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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.