Ricerc@Sapienza

Credit institutions often refuse to lend money to small firms. Usually, this happens
because small firms are not able to provide collateral to lenders. Moreover, given the
small amount of required loans, the relative cost of full monitoring is too high for
lenders. Group lending contracts have been viewed as an effective solution to credit
rationing of small firms in both developing and industrialized countries. The aim of
this paper is to highlight the potential of group lending contracts in terms of credit

In this paper we develop a conceptual framework to define small and medium-sized enterprise development banks (SMEDB). This conceptual effort is motivated by the lack of a clear definition of SMEDB. Once a consistent definition of SMEDB is provided, we compare a sample of banks that are SMEDB according to such definition with a sample of commercial banks.

Credit Guarantee Schemes (CGSs) issue partial guarantees to cope with financial instability and moral hazard problems on the part of the borrowing firms. Our paper focuses on the magnitude of partial coverage ratios, proposing and applying a dose–response model to identify both the minimum (below which guarantees are not effective) and optimal (the one maximizing the guarantees effectiveness) magnitude.