Spatial Evaluation of Public Credit Guarantees for Italian SMEs

The recent literature on the effects of the Central Guarantee Fund (CGF) shows a positive but moderate effect of CGF on subsidized firms and involved regional economies. Nevertheless, the results neglect the presence of spatial relations across firms and regions. The spillovers can be positive, on the demand side, or negative, tightening factor markets. In this paper we deal with spatial effect of CGF, considering spillovers across NUTS-3 areas in Italy. The impact is decomposed into direct effects on the NUTS- 3 areas where the guarantees are required, and indirect effects from the neighboring areas. We use different models combining a «long» DID approach and a spatial Durbin model. The results suggest that there is a positive and statistically significant, albeit modest, correlation between the use of CGF and the growth of provincial economies, controlling for sectoral differences, dimensional characteristics and several interactions. The presence of spatial spillovers marginally increases the positive effect of the CGF.