Public guarantee schemes and credit additionality - The case of the Italian response to COVID-19 crisis

The paper provides an overview of the public guarantee schemes activated in the main European countries following the outbreak of the COVID-19 pandemic and discusses their regulation at European level as state aid. It then outlines the reasons, the main characteristics, the risks and benefits related to guarantees and evaluates their effectiveness. Finally, the paper focuses on the Italian loan guarantee program "Fondo di garanzia per le piccole e medie imprese" which has been enhanced to cope with the crisis, testing its ability to generate additional credit for beneficiary enterprises in 2020. It also analyzes how selected firm characteristics influence the propensity to receive a guaranteed loan and how additionality of credit changes as the coverage of the program varies.