Partial credit guarantees and SMEs financing

Using data for the Italian Central Guarantee Fund for Small and Medium Enterprises, the paper analysesthe effect of partial credit guarantees on firms’ financing. We show that neglecting heterogeneity inguarantee intensities, namely considering all firms as equally treated, leads to a mis-measurement of theadditionality effect. Moreover, we document the existence of non-linear effects, suggesting that coverageratios below a certain threshold are likely to be ineffective to lessen obstacles faced by firms when seekingexternal financing funds.