The effects of mutual guarantee consortia on the quality of bank lending

Francesco Columba, Leonardo Gambacorta and Paolo Emilio Mistrulli

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we investigate whether or not mutual guarantee consortia (MGC), a financial institution well developed in Italy, alleviate the difficulties that Small and Medium Enterprises (SMEs) face when they ask for a bank loan. We find that the probability of a small firm affiliated to a MGC of going into default is lower than that of firms not affiliated to such a consortium. These results indicate that MGCs improve the ability of banks to screen and monitor small firms.

Keywords: bank credit; financial intermediaries; small and medium enterprises; bad debt. (search for similar items in EconPapers)
JEL-codes: D82 G21 G30 O16 (search for similar items in EconPapers)
Date: 2009-04, Revised 2009-03
New Economics Papers: this item is included in nep-ban and nep-rmg
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17052

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