Mutual Guarantee Institutions (MGIs) and Small Business Credit During the Crisis

44 Pages Posted: 5 Feb 2012

Date Written: October 19, 2011

Abstract

The recent economic and financial crisis has drawn attention to how mutual guarantee institutions (MGIs) facilitate small and medium enterprises in accessing bank financing. The aim of this paper is twofold. First, we describe the structural features of the Italian market for mutual guarantees and its significance for small business credit. To this end, we use extensive databases (the Central Credit Register and the Central Balance Sheet Register) as well as specific surveys, which allow us to fill information gaps about this industry and to quantify regional diversity. Second, we investigate whether MGIs’ support to small firms continued to be effective in 2008-09, when credit constraints to Italian firms peaked. We find that MGIs played a role in avoiding a break-up in credit flows to affiliated firms, which also benefited from a lower cost of credit. However, this came at the cost of a deterioration in credit quality, which was more intense for customers with guarantees from MGIs.

Keywords: microfinance, peer monitoring, small business finance

JEL Classification: D82, G21, G30

Suggested Citation

Mistrulli, Paolo Emilio and Vacca, Valerio Paolo and Corbisiero, Gennaro and Del Prete, Silvia and Esposito, Luciano and Gallo, Marco and Graziano, Mariano and Lozzi, Maurizio and Maffione, Vincenzo and Marangoni, Daniele and Migliardi, Andrea and Tosoni, Alessandro, Mutual Guarantee Institutions (MGIs) and Small Business Credit During the Crisis (October 19, 2011). Bank of Italy Occasional Paper No. 105. Available at SSRN: https://ssrn.com/abstract=1998772 or http://dx.doi.org/10.2139/ssrn.1998772

Paolo Emilio Mistrulli (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Valerio Paolo Vacca

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Gennaro Corbisiero

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Silvia Del Prete

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Luciano Esposito

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Marco Gallo

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Mariano Graziano

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Maurizio Lozzi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Vincenzo Maffione

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Daniele Marangoni

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Andrea Migliardi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Alessandro Tosoni

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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