Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325013 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12022
Publisher: 
CESifo GmbH, Munich
Abstract: 
Loan guarantees can enhance access to credit, but serving as a private guarantor may also increase financial vulnerability. We examine, through a randomized information experiment in the UK, how providing information about the legal ramifications and risks of loan guarantees affects individuals' willingness to act as guarantors. We find that providing information about legal risks reduces the willingness to guarantee loans, with stronger effects for larger loan amounts. Social preferences influence individuals' willingness to act as guarantors. Information about legal ramifications increases the willingness to grant a guarantee among altruists but decreases it among those high in positive reciprocity. While information about the UK default rate reduces willingness, individuals are less likely to update their expectations for someone they know personally, indicating in-group bias.
Subjects: 
third-party loan guarantees
survey experiment
social preferences
loan default expectations
JEL: 
D14
G41
G51
G53
Document Type: 
Working Paper
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