The paper analyzes the role of guarantees on interest rates before and during the recent financial crisis in small-sized firm financing. The novelty of this work is the distinction between real and personal guarantees, and the potential different role they could have played in the bank-borrower relationship during the recent financial crisis. This paper draws from individual Italian bank and producer households data taken from the Central Credit Register at the Bank of Italy over the period 2006–2009. Our analysis demonstrates that collateral affects the cost of credit of small business by systematically reducing the spread of secured loans, once we control for borrower and loan risk. Personal guarantees reduce the loan interest rate only during the crisis.
Guarantees and Bank Loan Interest Rates in Italian Small-sized Firms
CALCAGNINI, GIORGIO;GIOMBINI, GERMANA
2012
Abstract
The paper analyzes the role of guarantees on interest rates before and during the recent financial crisis in small-sized firm financing. The novelty of this work is the distinction between real and personal guarantees, and the potential different role they could have played in the bank-borrower relationship during the recent financial crisis. This paper draws from individual Italian bank and producer households data taken from the Central Credit Register at the Bank of Italy over the period 2006–2009. Our analysis demonstrates that collateral affects the cost of credit of small business by systematically reducing the spread of secured loans, once we control for borrower and loan risk. Personal guarantees reduce the loan interest rate only during the crisis.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
