Mutual Loan-Guarantee Societies, Small Firms and Banks: An Empirical Investigation (Confidi, Piccole Imprese E Banche: Un'Analisi Empirica)

29 Pages Posted: 19 Mar 2008 Last revised: 16 Jul 2008

See all articles by Giovanni Busetta

Giovanni Busetta

University of Messina - Department of Economics, Business, Environmental Sciences and Quantitative Methods

Andrea Filippo Presbitero

Università Politecnica delle Marche - Department of Economics; Centre for Macroeconomics & Finance Research (CeMaFiR)

Abstract

The paper analyzes the relationships between mutual loan-guarantee societies (MLGS), small firms and banks trying to evaluate the role played by the guarantees granted by MLGSs and by different banks on the availability and the cost of credit. We focus on a sample of firms member of a specific MLGS and we run different econometric exercises in order to identify the effects of the interaction between local firms, banks and MLGS on credit rationing, on the cost of credit, and on the time and the number of guarantees required to obtain a line of credit. Our findings suggest a critical relevance of the MLGS guarantees on the local firms' credit access and conditions. Finally, while the existing evidence points out a reduction in the cost of credit due to MLGSs intermediation, our analysis stresses the heterogeneity of the benefits for local firms, which depends substantially by the guarantees provided by the MLGS and by the reference banks.

Note: Downloadable document is in Italian.

Keywords: Mutual Loan Guarantee Societies (MLGS), Guarantee, Small business lending, Local banks

JEL Classification: G21

Suggested Citation

Busetta, Giovanni and Presbitero, Andrea Filippo, Mutual Loan-Guarantee Societies, Small Firms and Banks: An Empirical Investigation (Confidi, Piccole Imprese E Banche: Un'Analisi Empirica). Available at SSRN: https://ssrn.com/abstract=1108904 or http://dx.doi.org/10.2139/ssrn.1108904

Giovanni Busetta

University of Messina - Department of Economics, Business, Environmental Sciences and Quantitative Methods ( email )

Via T. Cannizzaro 278
Messina, 98122
Italy

Andrea Filippo Presbitero (Contact Author)

Università Politecnica delle Marche - Department of Economics ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy
+39 0712207074 (Phone)

HOME PAGE: http://sites.google.com/site/presbitero/

Centre for Macroeconomics & Finance Research (CeMaFiR) ( email )

Piazza Mirabello, 2
Milan, 20100
Italy

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