The role of state-funded credit guarantee schemes for SMEs. Italy’s experience

This essay provides an in-depth evaluation of the impact of public credit guarantees to SMEs in increasing credit availability, reducing borrowing costs and attaining financial sustainability. Extensive econometric tests have been carried out by comparing the performance of the SMEs that benefited from this guarantee in Italy with a sample of comparable firms. The findings confirm the presence of a causal relationship between the public guarantee and the higher debt leverage of guaranteed firms, as well as their lower debt cost. Italy’s guarantee instrument has proved to be an effective instrument, although it has had a limited economic impact.