Public credit guarantee schemes have gained popularity as a tool to try to increase access to credit for firms perceived to be financially constrained, typically small and medium-sized enterprises. This paper discusses the potential relevance of these schemes by providing a brief overview of their use around the world and reviewing some important design features. The paper also presents a brief conceptual discussion of the role of public credit guarantees in increasing access to credit and the rationale for government intervention. Public credit guarantee schemes can constitute useful mechanisms for increasing access to finance for certain groups of borrowers, but their success and financial sustainability hinge on proper design. Moreover, rigorous evidence on the impact of these schemes is still scarce. More in-depth evaluations that jointly take into account financial sustainability and (financial and economic) additionality are needed, as well as an assessment of credit guarantees against alternative policy instruments.
Juan Carlos Gozzi
Juan Carlos Gozzi is an assistant professor in the Economics Department at the University of Warwick.
His research area is international finance and financial markets and institutions. In particular, his research focuses on financial globalization, financial crises, corporate finance, bank financing to small and medium enterprises, and the transmission of financial shocks.
Dr. Gozzi have previously worked at the Board of Governors of the Federal Reserve and the World Bank Research Department. I obtained my Ph.D. in Economics from Brown University in 2011.