Public Credit Guarantee Schemes and SMEs’ Profitability: Evidence from Italy

Caselli, Stefano; Corbetta, Guido; Rossolini, Monica; Vecchi, Veronica

doi:10.1111/jsbm.12509

Cited by 19 publications

(14 citation statements)

References 63 publications

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“…Economic additionality refers to the improved economic performance that beneficiary companies experience due to increased access to finance (Leone & Vento, 2012 ; Levitsky, 1997 ). Researchers measure the impact of public guarantees in terms of the following: Employment by considering increases in the number of employees or the employment growth rate (Armstrong et al, 2010 ; Riding et al, 2007 ); Sales and profitability in terms of ROE and ROI (Asdrubali & Signore, 2015 ; Bertoni et al, 2018 ; Caselli et al, 2019 ; Kang & Heshmati, 2008 ; Mole et al, 2009 ); and Investments in terms of both working capital and investment capital (Ono et al, 2010 ). …”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

How does government-backed finance affect SMEs’ crisis predictors?

2023

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This paper estimates the impact of public guarantees on crisis predictive indicators among small and mid-size enterprises (SMEs). We use a confidential database provided by the Italian Ministry of Economic Development on the universe of guarantees granted by the Central Guarantee Fund. We apply difference-in-difference regressions and propensity-score matching estimators to a sample of approximately 40,000 SMEs over the 2010–2018 period. We find that obtaining a public guarantee improves profitability both in the short- and medium-term. On the other hand, SMEs’ financial health worsens in the short run, but financial burdens are alleviated 2 years after the issuance of a guarantee. The economic and financial effects of government-backed loans are amplified for micro-sized firms, companies operating in the service sector and direct guarantees. Our results can thus support public authorities in designing credit guarantee schemes capable of preventing SMEs’ zombification and protecting them from the risk of debt overhang.

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Section: Literature Review and Hypothesesmentioning

confidence: 99%

How does government-backed finance affect SMEs’ crisis predictors?

2023

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“…Public administrations might use guarantee systems to facilitate credit access due to market restrictions and imperfections (Garcia-Tabuenca & Crespo-Espert, 2010). Moreover, public credit guarantee schemes aim to reduce banking financial losses in cases of borrower default (Caselli et al, 2019). Governments in developed countries design programmes to improve the competitiveness of SMEs.…”

Section: Introductionmentioning

confidence: 99%

Wholesale and retail trade sector in Poland: use of de minimis credit guarantees by micro, small and medium-sized enterprises

Zając¹,

Wielechowski²,

Czech³

2022

JoMS

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Public guarantee programmes aim to improve access to financing for micro, small, and medium-sized enterprises (SMEs) and support entrepreneurship. The objective of our paper is to present and assess the de minimis guarantee programme for SMEs in the wholesale and retail trade sector in Poland. In detail, we analyze changes in the number and value of credit guarantees from national and regional perspectives. The research period covers the first eight years of the program functioning, i.e., 2013-2020. Data was gathered from Bank Gospodarstwa Krajowego (BGK), a Polish national development bank. The study reveals visible fluctuations in the number and value of de minimis guarantees obtained by the SMEs in the wholesale and retail trade sector. However, in 2019-2020 we observed their substantial growth. SMEs in the analysed sector primarily use the de minimis guarantee programme to secure revolving working capital loans. Micro-enterprises obtain 75% of the total number and 40% of the total value of guarantees. We observe substantial regional differences in the number and value of granted guarantees among 16 Polish voivodeships rooted in the voivodeship size. The t-test analysis confirmed that both numbers and values of credit guarantees A. ZAJĄC, M. WIELECHOWSKI, K. CZECH WyżSza Szkoła GoSpodarki euroreGionalneJ iM. alcide de GaSperi W JózefoWie 276 are significantly greater in 2019-2020, at a 1% significance level. Such results may indicate an increased need for external support for analysed SMEs due to changes in the de minimis guarantee program, stricter bank lending policy and the harmful effects of the COVID-19 pandemic.

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“…Loan guarantees increase SMEs' creditworthiness, decrease the risk of insolvency, and indirectly lower the cost of financing to reduce differences in the availability of external capital for companies of different sizes (Song, Zhang, and Zhao 2020). Credit Guarantee Schemes (CGSs) reduce financing obstacles and improve a firm's ability to access bank financing, especially for small and micro companies (Caselli et al 2019). As Pergelova and Angulo-Ruiz (2014) stated, government guarantees directly affect new firms' competitive advantage and indirectly impact their performance.…”

Section: Introductionmentioning

confidence: 99%

“…One is the impact of guarantees on lending conditions, such as the cost of a loan or the amount of financing provided (Boschi, Girardi, and Ventura 2014). The other is connected with the indirect effects of guarantees, such as the SMEs' survival, financial performance (Caselli et al 2019), employment (Caselli et al 2019), and the impact on the economy (Lee 2018;Yang et al 2021).…”

Section: Introductionmentioning

confidence: 99%

Credit Guarantee Schemes – Are They Efficient? Experience from European Union Countries

Waniak-Michalak

Woźniak

Lisowski

2022

CER

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The paper aims to assess selected elements of the business models of credit guarantee schemes (CGSs) implemented in 20 European Union countries within the financial framework between 2007 and 2013. This paper focuses on the CGSs’ financial additionality that depends mainly on how these programs are managed, the institutions implementing them, the objectives set and their distribution constraints. We analyse the implementation costs and the use of the funds allocated to implement the schemes. To reach the goal, we used several methods: the Kruskal‑Wallis by ranks, the median test, discriminant analysis, multidimensional scaling, and correlation. We also did the power analysis. We discovered that the efficiency of CGS implemented by non‑governmental organisations, mutual guarantee funds and regional agencies is related to the level of regional development. The relationship is not visible only when banks are engaged, which may be due to the impossibility of assigning a bank’s activities to a single region. However, we did not find differences in efficiency between types of organisations that implement CGSs. The answers to the research questions posed in the article can help policymakers and researchers conclude whether it is cost‑effective to continue supporting CGSs and whether the management of these schemes should change. The paper contributes to the economic policy theory in the area of state aid to SMEs and public finance.

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Public Credit Guarantee Schemes and SMEs’ Profitability: Evidence from Italy

Cited by 19 publications

References 63 publications

How does government-backed finance affect SMEs’ crisis predictors?

How does government-backed finance affect SMEs’ crisis predictors?

Wholesale and retail trade sector in Poland: use of de minimis credit guarantees by micro, small and medium-sized enterprises

Credit Guarantee Schemes – Are They Efficient? Experience from European Union Countries

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