Public guarantees to SME borrowing. A RDD evaluation

The paper evaluates the impact of the guarantees provided by the Italian scheme Fondo di Garanzia on the access to credit for small and medium enterprises. The study exploits the mechanism that assigns the guarantees, which is based on a scoring system to assess eligibility. By using regression discontinuity techniques, the paper finds that, at the threshold between eligible and non-eligible firms, the program has a positive impact on bank loans to firms; however, the scheme has no impact on the interest rate charged by the banks, while it affects positively the likelihood that a firm becomes unable to repay its loans. The guaranteed loans are mostly used to finance working capital. Finally, the paper provides inference for far-from-the-threshold firms.