Policy Insights
Policy Insight 133: Government guarantee programmes for bank lending to firms: Lessons for future policymakers
Government guarantee programmes during COVID-19 were mostly adopted as a matter of urgency. Under extreme uncertainty during the pandemic, banks and firms faced liquidity and credit constraints as they were hit by severe demand shocks.
This Policy Insight analyses government guarantee programmes for bank lending to firms in the context of the COVID-19 pandemic. It does so on the basis of an ad-hoc questionnaire completed by 17 central banks around the world and from our review of the evidence from studies that examine the programmes that were implemented in different countries. Programmes differed significantly in scale and design. The authors draw policy lessons by considering both the features of the measures implemented and the outcomes. While generally labelled as effective in the sense that bank lending to firms did not collapse in the pandemic crisis, broader outcomes over short and long horizons are useful to register.
