We study third-party loan guarantees in a model in which lenders can screen, learn loan quality over time and can sell loans before maturity when in need of liquidity. Loan guarantees improve market liquidity and reduce lending standards, with a positive overall welfare effect. Guarantees...

The growth in government loan guarantee programs relative to other forms of intervention in credit markets prompts the question: Are loan guarantees necessarily better than other subsidies, particularly direct loans and grants, in providing benefits to targeted groups? The answer is: not in all...

This paper evaluates, under a descriptive approach if, by means of their loan guarantee programs, the Mexican government-owned financial institutions have succeeded in promoting the private banks credit supply to targeted segments of private businesses; fostered the granting of loans that help...

The efficiency of federal lending guarantees depends on whether guarantees increase lending supply, or simply act as a subsidy to lenders. We use notches in the guarantee rate schedule for loans backed by the Small Business Administration to estimate the elasticity of bank lending volume to loan...