Public Guarantees for Small Businesses in Italy during COVID-19

52 Pages Posted: 19 May 2020 Last revised: 11 Feb 2021

See all articles by Fabrizio Core

Fabrizio Core

Erasmus University Rotterdam (EUR) - Department of Business Economics

Filippo De Marco

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; CEPR Financial Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 11, 2021

Abstract

This paper investigates whether the private sector can efficiently allocate public funds during a crisis. Using loan-level data, we exploit the unique features of the Italian public guarantee scheme during COVID-19 to study lenders’ incentives to distribute government guaranteed credit. Our results indicate that two key bank characteristics facilitated loan disbursement: size and information technology. These factors are important because of the high volume of online applications and low interest margins on guaranteed lending. Pre-existing relationships matter for the allocation of guaranteed credit, as banks lend more in their core markets and where they have a larger share of branches.

Keywords: public guarantees, COVID-19, liquidity constraints, information technology, bank heterogeneity, interest rates

JEL Classification: G32, G38, H25, H32, E62

Suggested Citation

Core, Fabrizio and De Marco, Filippo, Public Guarantees for Small Businesses in Italy during COVID-19 (February 11, 2021). Available at SSRN: https://ssrn.com/abstract=3604114 or http://dx.doi.org/10.2139/ssrn.3604114

Fabrizio Core

Erasmus University Rotterdam (EUR) - Department of Business Economics ( email )

Netherlands

Filippo De Marco (Contact Author)

Bocconi University - Department of Finance ( email )

Department of Finance
Via Roentgen 1
Milano, MI 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

CEPR Financial Economics ( email )

London
United Kingdom

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