VoxEU Column
by Jin Cao, Linda S. Goldberg, Sonalika Sinha & Stefano Ungaro
Government guarantee programmes for bank loans to businesses adopted during the COVID-19 crisis were broad in scope and sometimes quite different in their design and terms. A new CEPR Policy Insight uses a survey of 17 central banks to explore policy lessons by examining the design parameters of the guarantee programmes implemented in their jurisdictions and whether these led to different outcomes across countries. While survey respondents indicated that the interventions were ‘effective’ in enabling bank lending to firms during the pandemic, the findings highlight the importance of focusing on the specifics of programme designs that shape the extent of effectiveness and prevented moral hazard concerns.
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VoxEU Column: Learning lessons from government guarantee programmes for bank lending to firms