The effect of credit guarantees on credit availability and delinquency rates
| Autor: | Kevin Cowan, Alejandro Drexler, Álvaro Yañez |
|---|---|
| Rok vydání: | 2015 |
| Předmět: |
Economics and Econometrics
Credit availability media_common.quotation_subject Financial intermediary Adverse selection Credit reference Financial system Monetary economics Payment Affect (psychology) Installment credit Credit default swap index Incentive Credit history Liberian dollar Juvenile delinquency Bond credit rating Credit crunch Credit enhancement Business Finance Credit risk media_common |
| Zdroj: | Journal of Banking & Finance. 59:98-110 |
| ISSN: | 0378-4266 |
| DOI: | 10.1016/j.jbankfin.2015.04.024 |
| Popis: | Partial credit guarantees are among the most important interventions designed to improve financial opportunities to small- and medium-size entrepreneurs (SMEs). Here, a third party, usually the government, guarantees the repayment to the lender in the event that the borrower defaults. Almost 100 countries have some form of PCGs; and, in the US alone, PCGs support US$ 62.5 billion in loans to SMEs. Despite the magnitude of this intervention, the empirical evidence about its effectiveness and its impact on economic incentives is contentious. We use novel data to examine whether credit guarantees affect the credit available to small- and medium-size entrepreneurs (SMEs), and whether they affect repayment. We find that credit guarantees increase the amount of credit; in particular one additional dollar of insurance increases the total credit for SMEs by US$ 0.65. We also find that borrowers are 2% less likely to repay insured loans compared to uninsured loans. A decrease in the collection effort by the bank explains this decrease in the repayment rate. However, the monitoring effort remains unchanged. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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