Abstract

http://ssrn.com/abstract=1406424
 
 

References (41)



 
 

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Mutual Guarantee Institutions and Small Business Finance


Francesco Columba


International Monetary Fund (IMF); Bank of Italy

Leonardo Gambacorta


Bank for International Settlements (BIS)

Paolo Emilio Mistrulli


Bank of Italy

May 18, 2009

European Banking Center Discussion Paper No. 2009-05S
CentER Discussion Paper Series No. 2009-32S

Abstract:     
A large literature showed that small firms experience difficulties in accessing the credit market due to informational asymmetries; these may be mitigated by collateral or relationship lending, possibilities often precluded to small business. We investigate the effect on small business finance of an alternative contractual scheme based on group lending, the Mutual Guarantee Institution (MGI). We test whether firms affiliated to MGIs pay less for credit, due to a joint responsibility that provides affiliates with peer monitoring incentives. Hence, MGI willingness to post collateral signals firms credit-worthiness to banks. Our estimates indicate that indeed MGI affiliation improves small firms lending.

Number of Pages in PDF File: 35

Keywords: credit guarantee schemes, group lending, joint liability, microfinance, peer monitoring, small business finance

JEL Classification: D82, G21, G30, O16

working papers series


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Date posted: May 21, 2009  

Suggested Citation

Columba, Francesco and Gambacorta, Leonardo and Mistrulli, Paolo Emilio, Mutual Guarantee Institutions and Small Business Finance (May 18, 2009). CentER Discussion Paper Series No. 2009-32S. Available at SSRN: http://ssrn.com/abstract=1406424 or http://dx.doi.org/10.2139/ssrn.1406424

Contact Information

Francesco Columba (Contact Author)
International Monetary Fund (IMF) ( email )
700 19th Street, N.W.
Washington, DC 20431
United States
202 623 6134 (Phone)
Bank of Italy ( email )
Via Nazionale 91
Rome, 00184
Italy
+39-06-47925599 (Phone)
+39-09-47923611 (Fax)
Leonardo Gambacorta
Bank for International Settlements (BIS) ( email )
Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland
Paolo Emilio Mistrulli
Bank of Italy ( email )
Via Nazionale 91
00184 Roma
Italy
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