The Centre for Economic Policy Research (CEPR) Research Policy Network (RPN) on European Economic Policy, in collaboration with the CEPR RPN on European Financial Architecture and the European and Monetary Union (EMU) Laboratory of the European University Institute (EUI), organised a webinar on
Loan Guarantees and Public Policy
that was held online on
Thursday, 17 October 2024
05:00 - 06:15 PM (CEST)
via Zoom
Paper presenters
Linda Goldberg (Federal Reserve Bank of New York and CEPR)
Marco Pagano (University of Naples Federico II and CEPR)
Stefano Ungaro (European Commission)
Organisers and Moderators:
Laura Bottazzi (Bocconi University and CEPR)
Giancarlo Corsetti (EUI and CEPR)
Abstract: The Draghi report refers to public guarantees on bank loans to firms as one among the possible measures to foster firms investment in projects with a risk profile that may discourage market financing. To gain insight, this webinar took stock of the analyses conducted so far on the bank guarantees programmes launched in response to the COVID-19 pandemic in a number of advanced countries. While the COVID-19 shock and the policy response to it are in many ways special, and there is significant heterogeneity in scope and size of the programmes across border, a review of the experiences can bear educated lessons for the design of effective bank guarantees. The webinar discussed issues in moral hazard, substitution of non-guaranteed with guarantees lines of credit, destination of the loans, access to the programme and conditionality. The discussion were based on two contributions. The first is a recent CEPR Policy that reviews the evidence from cross-country studies the programmes and the responses to an ad-hoc questionnaire completed by 17 central banks around the world. The second is an analysis focused on the EA, based on a unique euro-area credit register data.
Papers:
- Cao, J., Goldberg, L., Sinha, S., & Ungaro, S. (2024). Policy Insight 133: Government guarantee programmes for bank lending to firms: Lessons for future policymakers. CEPR Policy Insight No. 133. CEPR Press, Paris & London.
- Altavilla, C., Ellul, A., Pagano, M., Polo, A., & Vlassopoulos, T. (2021). Loan Guarantees, Bank Lending and Credit Risk Substitution. CSEF Working Paper No. 629, EIEF Working Paper No. 21/13, CEPR Discussion Paper No. 16727, and SSRN Working Paper No. 3963246.
