Credit guarantee schemes for small businesses : between euphoria and scepticism ; concepts and experiences with institutional structures in Europe and Latin America ; with case illustrations from Germany and Brazil

Small businesses often face problems in obtaining credit. One reason for this may be the lack of collateral. In addition, banks can find it difficult to evaluate the creditworthiness of these borrowers. As an answer to these problems, many countries worldwide have established credit guarantee schemes, which can provide guarantees and which can help to reduce information asymmetries. Theoretically, the thesis aims to deepen the understanding of the institutional design of credit guarantee schemes and the interplay of the actors involved. In addition, it provides new complementary approaches to categorise the different types of credit guarantee schemes worldwide. In order to differentiate the small businesses and their financial needs, this research uses the differentiation provided by Schumpeter between the unternehmerʺ, who carries out new combinations of means of productionʺ and usually needs a bank to finance his or her investment, and the wirtʺ, who runs his or her business in a circular flow, and receives finance by the sale of what was produced before. Empirically, the core of the thesis is an assessment of the long-established German Guarantee Banks, as well as of the Brazilian Credit Guarantee Societies, which are still under con-struction. The German schemes are analysed from their beginning in the 1950s until today. These in-depth findings are then cross-checked in a broader analysis covering guarantee schemes in 17 countries worldwide. The key finding is that scepticism with credit guarantee schemes is indeed adequate since banks are the better institutions to provide access to finance to a broad number of small businesses. However, one can be optimistic, if not euphoric, when governments heed the problems of credit guarantee schemes and use them to positively influence the banks to support both the more promising but often riskier unternehmerʺ, and during times of financial crises also to the wirteʺ.