No. 1462 - The allocation of public guaranteed loans to firms during Covid-19: credit risk and relationship lending
This paper studies the allocation of government-guaranteed loans during the pandemic, taking into account the credit risk of borrowers and the characteristics of bank-firm relationships. The analysis tests whether firms that were relatively riskier before the pandemic benefited more frequently from guaranteed loans, and whether the uptake of the scheme was greater among firms with closer bank-firm relationships or among new borrowers.
Guaranteed loans were used more frequently by firms with a relatively lower pre-pandemic credit risk, in relationships between firms and their main lenders (in terms of share of credit borrowed), and in relationships with a higher credit utilization ratio. In line with their function of mitigating information asymmetries in the credit market, guarantees are found to be more likely to be observed among new borrowers.
YouTube
X - Banca d'Italia
Linkedin
RSS
E-mail Alert
