No. 1369 - Public guarantees and credit additionality during the Covid-19 pandemic

Vai alla versione italiana Site Search

by Giuseppe Cascarino, Raffaele Gallo, Francesco Palazzo and Enrico SetteApril 2022

This paper examines the public loan guarantee programs implemented in Italy for small and medium-sized enterprises in the aftermath of the outbreak of the pandemic and granted between April 2020 and March 2021. The analysis quantifies to what extent public guarantees created additional credit with respect to pre-existing levels, across programs with different coverage ratios and over time.

The credit additionality of the guarantee programs was highest between April and June 2020, especially for 100 per cent guaranteed loans, for which each euro of guarantee generated around 84 cents of additional credit. In the following quarters, the degree of additionality decreased for all programs, to 60 cents on average. For loans with a coverage ratio lower than 100 per cent, credit granted by better capitalized banks showed greater additionality.