Abstract

In this article we examine the real and financial effects of public credit guarantees issued to SMEs in different regions in Croatia. Credit guarantee schemes are aimed at increasing lending to SMEs and are widely spread around the world. However, the evaluation of their efficiency is lagging behind and existing empirical evidence on the impact of state guarantees and other forms of government interventions in the credit market is mixed. Hence in this article we are investigating the impact of public credit guarantees on company development. Analysis is conducted using data on credit guarantees that the Croatian Agency for SMEs, Innovations and Investments (HAMAG-BICRO) gives to the SME sector, as well as data on company financials and demographics. Results show that companies that received public credit guarantees indeed have better performance than similar companies that did not get guarantees. Still, the difference in performance is not visible immediately, but only after several years (depending on the indicator used).

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