Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289957 
Year of Publication: 
2023
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-1430
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
We conducted two randomized controlled trials (RCTs) to evaluate the impact of government-guaranteed loans offered by the Chilean and Colombian governments. The public funds of these programs greatly expanded following the start of the Covid-19 pandemic and offered loans to Micro, Small and Medium Enterprises to mitigate the negative impact of the shock. Through a collaboration with private banks, we launched two experiments which offered loans to a sub-set of the 10,072 Chilean and 3,079 Colombian small businesses that took part in our experiments. Most of these firms had previously applied for a loan-during the pandemic but prior to the RCTs-but were rejected by banks due to their risk analysis of the firms. With take-up rates of 27% and 29%, respectively, we find that Covid-19 loans had a significant positive impact on the total liquidity that treated MSMEs could access: total liquidity with the formal banking system increased by 15.7% (statistically significant at the 1% level). The results of our RCTs will inform Latin American governments concerning their strategies to support MSMEs via government-backed loan programs and will shape similar public policies in the future.
Subjects: 
RCT
Government-guaranteed loans
Covid-19 pandemic
Eventstudy
Impact evaluation
JEL: 
J16
L26
P52
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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