The paper studies the impact of a public credit guarantee for small- and medium-sized enterprises (SMEs) provided by the Italian Fondo Centrale di Garanzia. The authors evaluate its effectiveness in improving credit accessibility in terms of both quantity and cost, and assess whether these financial additionalities depend on the firm's riskiness.
The scheme operated by the Fondo Centrale di Garanzia allows SMEs to obtain from the banks that disburse the guaranteed loans an increase of between 7 and 8 per cent on average in total bank funding, and a reduction of approximately 50 basis points in the interest rate on term loans. The effect on credit quantity is concentrated in the intermediate class of solvent firms. Conversely, interest rate effects are present in all classes, except for the least risky firms, which already benefit from lower interest rates.
