Differential Effects of Partial Credit Guarantee Schemes: A Dose-Response Function Approach
![Foto A parziale garanzia. Per quale livello di copertura le garanzie offerte dal Fondo centrale per le PMI si sono dimostrate più efficaci? Foto A parziale garanzia. Per quale livello di copertura le garanzie offerte dal Fondo centrale per le PMI si sono dimostrate più efficaci?](/application/xmanager/projects/leg19/attachments/dossier/immagines/000/002/204/parzialegaranzia.jpg)
Credit Guarantee Schemes issue partial guarantees, i.e. they cover up to a certain share of the loan borrowed by firms, in order to mitigate financial stability and moral hazard problems on the part of the guaranteed firms.
Although guarantees play a key role in relaxing financial constraints, existing studies have largely focused on firms having received a guarantee, and ignored the magnitude of the partial guarantee.
This article takes this issue into account and estimates a dose-response function, namely a different treatment effect for each value of the coverage ratio. For Italy, an inverse-U shaped relationship is found with the maximum of the effectiveness around 70% and no effects below and above 50% and 80%, respectively. This approach is quite informative as allows the policy makers to tailor the policy according to the specific value of the ratio.