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Intended and unintended consequences of government credit guarantee programmes

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Intended and unintended consequences of government credit guarantee programmes. / Ioannidou, Vasso; Liberti, José Maria; Mosk, Thomas et al.
Finance and Investment: The European Case. Oxford: Oxford University Press Inc, 2018. p. 317-325.

Research output: Contribution in Book/Report/Proceedings - With ISBN/ISSN › Chapter

Harvard

Ioannidou, V, Liberti, JM, Mosk, T & Sturgess, J 2018, Intended and unintended consequences of government credit guarantee programmes. in Finance and Investment: The European Case. Oxford University Press Inc, Oxford, pp. 317-325. https://doi.org/10.1093/oso/9780198815815.003.0018

APA

Ioannidou, V., Liberti, J. M., Mosk, T., & Sturgess, J. (2018). Intended and unintended consequences of government credit guarantee programmes. In Finance and Investment: The European Case (pp. 317-325). Oxford University Press Inc. https://doi.org/10.1093/oso/9780198815815.003.0018

Vancouver

Ioannidou V, Liberti JM, Mosk T, Sturgess J. Intended and unintended consequences of government credit guarantee programmes. In Finance and Investment: The European Case. Oxford: Oxford University Press Inc. 2018. p. 317-325 doi: 10.1093/oso/9780198815815.003.0018

Author

Ioannidou, Vasso ; Liberti, José Maria ; Mosk, Thomas et al. / Intended and unintended consequences of government credit guarantee programmes. Finance and Investment: The European Case. Oxford : Oxford University Press Inc, 2018. pp. 317-325

Bibtex

@inbook{ef4565e32d574e4083b8d6df1806a956,
title = "Intended and unintended consequences of government credit guarantee programmes",
abstract = "In this chapter, we provide empirical evidence that the underwriting of private sector loans through a loan guarantee programme distorts the efficient allocation of bank credit. We exploit cross-sectional and time series variation in the availability of loan guarantees to entrepreneurial firms in the Netherlands after the financial crisis to examine the impact of loan guarantees on a large sample of individual borrowers. The introduction and posterior withdrawal of the programme had the intended effect on the number of loan applications. Firms eligible for loan guarantees applied for more loans relative to those that were not. However, loan guarantees reduced the incentives on banks to screen and monitor the quality of loans by reducing collateralized loans and making riskier loans. Our findings suggest that government guarantee programmes may have adverse effects on the screening incentives of banks. {\textcopyright} Oxford University Press 2018. All rights reserved.",
keywords = "Credit guarantee programmes, Financial crisis, Loan guarantees, Screening incentives, The Netherlands",
author = "Vasso Ioannidou and Liberti, {Jos{\'e} Maria} and Thomas Mosk and Jason Sturgess",
year = "2018",
doi = "10.1093/oso/9780198815815.003.0018",
language = "English",
isbn = "9780198815815 ",
pages = "317--325",
booktitle = "Finance and Investment",
publisher = "Oxford University Press Inc",

}

RIS

TY - CHAP

T1 - Intended and unintended consequences of government credit guarantee programmes

AU - Ioannidou, Vasso

AU - Liberti, José Maria

AU - Mosk, Thomas

AU - Sturgess, Jason

PY - 2018

Y1 - 2018

N2 - In this chapter, we provide empirical evidence that the underwriting of private sector loans through a loan guarantee programme distorts the efficient allocation of bank credit. We exploit cross-sectional and time series variation in the availability of loan guarantees to entrepreneurial firms in the Netherlands after the financial crisis to examine the impact of loan guarantees on a large sample of individual borrowers. The introduction and posterior withdrawal of the programme had the intended effect on the number of loan applications. Firms eligible for loan guarantees applied for more loans relative to those that were not. However, loan guarantees reduced the incentives on banks to screen and monitor the quality of loans by reducing collateralized loans and making riskier loans. Our findings suggest that government guarantee programmes may have adverse effects on the screening incentives of banks. © Oxford University Press 2018. All rights reserved.

AB - In this chapter, we provide empirical evidence that the underwriting of private sector loans through a loan guarantee programme distorts the efficient allocation of bank credit. We exploit cross-sectional and time series variation in the availability of loan guarantees to entrepreneurial firms in the Netherlands after the financial crisis to examine the impact of loan guarantees on a large sample of individual borrowers. The introduction and posterior withdrawal of the programme had the intended effect on the number of loan applications. Firms eligible for loan guarantees applied for more loans relative to those that were not. However, loan guarantees reduced the incentives on banks to screen and monitor the quality of loans by reducing collateralized loans and making riskier loans. Our findings suggest that government guarantee programmes may have adverse effects on the screening incentives of banks. © Oxford University Press 2018. All rights reserved.

KW - Credit guarantee programmes

KW - Financial crisis

KW - Loan guarantees

KW - Screening incentives

KW - The Netherlands

U2 - 10.1093/oso/9780198815815.003.0018

DO - 10.1093/oso/9780198815815.003.0018

M3 - Chapter

SN - 9780198815815

SP - 317

EP - 325

BT - Finance and Investment

PB - Oxford University Press Inc

CY - Oxford

ER -