A dose-response approach to evaluate the effects of different levels of partial credit guarantees

Credit Guarantee Schemes (CGSs) issue partial guarantees to cope with nancial instability and moral hazard problems on the part of the borrowing rms. Our paper focuses on the magnitude of partial coverage ratios, propos- ing and applying a dose{response model to identify both the minimum (below which guarantees are not eective) and optimal (the one maximizing the guar- antees eectiveness) magnitude. Consistently with theoretical prescriptions, an inverted U-shaped relationship is found for a sample of Italian rms, with the maximum of the eectiveness around 70% and no eects below 55% and above 80%. Our approach and ndings seem useful to support policy makers in ne-tuning CGS policy.