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COVID-19 and public credit guarantees: a policy assessment

Author

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  • Cecilia Dassatti

    (Banco Central del Uruguay)

Abstract

The global business shutdown derived from the COVID shock posed the challenge for policymakers of designing a quick an effective response to cushion the negative impact of the pandemic on the activity of small firms. Using granular data on loans and guarantees, I study the impact of a Public Credit Guarantee Scheme implemented in Uruguay. The results of the estimations suggest that the policy effectively reached the targeted industries, offering evidence in favor of the private financial sector operating as a conduit of government-backed liquidity for microsmall- and medium-sized firms. I also find empirical evidence suggesting a mild opportunistic behavior through substitution of illiquid guarantees and about the role of state-owned banks in credit provision during the pandemic.

Suggested Citation

  • Cecilia Dassatti, 2023. "COVID-19 and public credit guarantees: a policy assessment," Documentos de trabajo 2023005, Banco Central del Uruguay.
    • Handle: RePEc:bku:doctra:2023005
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    File URL: https://www.bcu.gub.uy/Estadisticas-e-Indicadores/Documentos%20de%20Trabajo/5.2023.pdf
    File Function: First version, 2023
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    More about this item

    Keywords

    COVID-19; public credit guarantee; state-owned banks;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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