The Effects of Small-Firm Credit Guarantees During Recessions

Abstract：  

Credit guarantees are popular policy responses during crises. Despite their prevalence, evidence of their effectiveness is sparse. We estimate the impacts of UK guarantees implemented during the Great Recession, by exploiting unexpected firm-size eligibility restrictions. We use a difference-in-difference approach that compares trends in outcomes between eligible firms and non-eligible firms that had the same growth trajectories pre-launch. The CGS increased the growth of debt, performance, employment and productivity, but had no effect on fixed assets. The preponderance of evidence suggests that the guarantees enabled financially constrained firms to finance employees during the recession, which were fundamental in the recovery.

Speaker Biography： 

Su Wang is currently an assistant professor of finance at Amsterdam Business School, University of Amsterdam. Her research interests mainly lie in empirical corporate finance and entrepreneurship, with a focus on private and small and medium enterprises (SME). Su obtained her PhD in finance from LSE.