Partial Credit Guarantees and Firm Performance : Evidence from Colombia

This paper studies the effect of government-backed partial credit guarantees on firms' performance in Colombia. These guarantees are automatically granted by the National Guarantee Fund (NGF) to firms without enough collateral in order to lift their credit constraints. We put together a panel of firms covering the period 1997-2007 that allow us to control for observed and unobserved firm characteristics, which could affect both the selection of firms into the program and firms' performance. We find that firms that gain access to credit backed by the NGF were able to grow in terms of both output and employment. We do not find, however, any effect on productivity, wages, or investment