Public Guarantees for Small Businesses in Italy during COVID-19

53 Pages Posted: 19 May 2020 Last revised: 29 Dec 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: December 29, 2021

Abstract

This paper investigates whether banks' information technology (IT) and physical branch presence affect the supply of government guaranteed credit. For identification, we exploit loan level data and the unique institutional features of the Italian public guarantee scheme during Covid-19. Our results indicate that banks with better IT provide more, cheaper and faster guaranteed loans. However, the structure of local banking markets still matters: banks with better IT charge lower rates in less concentrated markets. Moreover, despite the high volume of online loan applications, guaranteed lending remained local: banks lent more in their core markets and where they have an ex-ante larger market share.

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 (December 29, 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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