Abstract
| Original language | English |
|---|---|
| Place of Publication | Tilburg |
| Publisher | Finance |
| Number of pages | 35 |
| Volume | 2009-32 S |
| Publication status | Published - 2009 |
Publication series
| Name | CentER Discussion Paper |
|---|---|
| Volume | 2009-32 S |
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Keywords
- credit guarantee schemes
- group lending
- joint liability
- microfinance
- peer monitoring
- small business finance
Cite this
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Mutual Guarantee Institutions and Small Business Finance. / Columba, F.; Gambacorta, L.; Mistrulli, P.E.
Tilburg : Finance, 2009. (CentER Discussion Paper; Vol. 2009-32 S).Research output: Working paper › Discussion paper › Other research output
TY - UNPB
T1 - Mutual Guarantee Institutions and Small Business Finance
AU - Columba, F.
AU - Gambacorta, L.
AU - Mistrulli, P.E.
N1 - This is also EBC Discussion Paper 2009-05 S - Subsequently published in Journal of Financial Stability, 2010 Pagination: 35
PY - 2009
Y1 - 2009
N2 - A large literature showed that small firms experience difficulties in accessing the credit market due to informational asymmetries; these may be mitigated by collateral or relationship lending, possibilities often precluded to small business. We investigate the effect on small business finance of an alternative contractual scheme based on group lending, the Mutual Guarantee Institution (MGI). We test whether firms affiliated to MGIs pay less for credit, due to a joint responsibility that provides affiliates with peer monitoring incentives. Hence, MGI willingness to post collateral signals firms credit-worthiness to banks. Our estimates indicate that indeed MGI affiliation improves small firms lending.
AB - A large literature showed that small firms experience difficulties in accessing the credit market due to informational asymmetries; these may be mitigated by collateral or relationship lending, possibilities often precluded to small business. We investigate the effect on small business finance of an alternative contractual scheme based on group lending, the Mutual Guarantee Institution (MGI). We test whether firms affiliated to MGIs pay less for credit, due to a joint responsibility that provides affiliates with peer monitoring incentives. Hence, MGI willingness to post collateral signals firms credit-worthiness to banks. Our estimates indicate that indeed MGI affiliation improves small firms lending.
KW - credit guarantee schemes
KW - group lending
KW - joint liability
KW - microfinance
KW - peer monitoring
KW - small business finance
M3 - Discussion paper
VL - 2009-32 S
T3 - CentER Discussion Paper
BT - Mutual Guarantee Institutions and Small Business Finance
PB - Finance
CY - Tilburg
ER -