Over the last two decades, some Italian regions have limited the operations of the Italian Public guarantee scheme (Fondo di Garanzia) for SMEs to loans guaranteed by mutual guarantee institutions. In this work, we compare the effects of the regulatory changes on those firms operating in the regions that have either abolished or introduced such a restriction, with respect to the control firms operating in neighbouring regions where the regulations have remained unchanged.
The cases in which the restriction of the Fondo's operations to loans guaranteed by mutual guarantee institutions was removed are associated with higher growth in the number of firms having access to such loans and in the total loans granted with respect to firms located elsewhere. Conversely, the introduction of such a restriction led to a lower growth. Without any constraints, the cost of credit also improved.
