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Difficulty in accessing finance is one of the critical factors constraining the development of small and medium-sized enterprises (SMEs) in Asia. Owing to their significance to national economies, it is important to find ways to provide SMEs with stable finance. One efficient way to promote SME financing is through credit guarantee schemes, where the government guarantees a portion (ratio) of a loan provided by a bank to an SME. This research provides a theoretical model and an empirical analysis of factors that determine optimal credit guarantee ratio. The ratio should be able to fulfill the government's goal of minimizing the bank's nonperforming loans to SMEs, and at the same time fulfill the government policies for supporting SMEs. Our results show that three categories of factors can determine the optimal credit guarantee ratio: (i) government policy, (ii) macroeconomic conditions, and (iii) banking behavior. It is crucial for governments to set the optimal credit guarantee ratio based on macroeconomic conditions and vary it for each bank or each group of banks based on their soundness, in order to avoid moral hazard and ensure the stability of lending to SMEs.

Only 23 out of 63 provinces in Vietnam have established credit guarantee funds since 2001, when Vietnamese government encouraged the establishment of provincial credit guarantee funds to support small and medium enterprises. The Credit Guarantee Fund which reach the largest small and medium enterprises guarantee for only 105 loans. The article uses content analysis method to assess the situation of credit guarantee operation for small and medium enterprises in Vietnam. Research shows that guarantee funds are currently not expanding due to the fact that unfavorable guarantee regulations do not encourage borrowing under the guarantee of these funds; charter capital is at small scale; cooperation between banks and these funds are not based on sharing benefits and risks; inflexible and increative Municipal Credit Guarantee Funds. Following the recent findings, the paper suggests recommendations for the policies to strengthen the credit accessibility of SMEs in Vietnam.

This handbook represents a synthesis of the experience gained by Friedrich-Ebert-Stiftung (FES) in dealing with the informal sector which has now been recognized for its rapid growth and high potential for creating employment opportunities and contribution to the national economy. The Double Credit Guarantee Scheme (DCGS) introduced by FES in collaboration with the Small Enterprises Finance Company (SEFCO) has made a mark as an innovative and effective approach to assist indigenous artisans who otherwise have no access to bank credit facilities. This handbook presents information on the scheme and on the Credit Guarantee Association (CGA), a self-help organization formed and administered by small scale businessmen. (DÜI-Hff)

This book analyses and confronts the functioning of guarantee systems for SMEs in countries where these schemes had an important development. The book also highlights how the current financial crisis is modifying the guarantees schemes, through policy maker interventions.

This work proposes an analysis of microcredit initiatives analyzed at the territorial level. The differences are analyzed on the basis of distinctive features to identify different ways to develop microcredit in Italy. An empirical analysis is also carried out to verify the existence of a statistically significant correlation between the characteristics of entrepreneurial microcredit programs and their default risk. The presence of credit guarantee systems and the role of bank intermediaries as promoters significantly mitigate the risk of default on these initiatives. Regional microcredit programs do not show significant territorial differences in terms of credit guarantees.

Reportedly, firms often find it impossible to finance large and long-term projects despite positive net present values. Should governments step in and can their assistance be effective? This paper studies the case of public export credit guarantees in Germany. Covering the default risk of exporters' foreign customers, the policy is supposed to enable funding of international business opportunities that would otherwise remain unexploited. Using German firm-level data covering the universe of publicly insured firms for the years 2000 to 2010, this study tests for the causal effect of guarantees on sales and employment. It employs a difference-in-differences strategy combined with a matching approach, to create an appropriate control group of untreated firms. It finds that guarantees increase firm-level sales and employment on average by about 4.5 and 3.0 percentage points, respectively. During the financial crisis of 2008/09, effects turn out larger. These findings suggest the presence of credit constraints and provide an argument justifying the observed government intervention.