SFS Cavalcade North America 2024
Georgia State University | May 19-22, 2024
Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
Please note that all times are shown in the time zone of the conference. The current conference time is: 1st May 2025, 10:34:27am EDT
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Session Overview |
Session | ||
Track W6-1: Loan Markets: Market Failures and Government Intervention
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Presentations | ||
Loan Guarantees and Incentives for Information Acquisition American University To address credit constraints in small-business lending markets, policymakers frequently use loan guarantees, which insure lenders against default. Guarantees affect loan prices by altering the effective marginal cost of lending but may create a moral hazard problem, weakening lenders’ information-acquisition incentives. I quantify these channels using data from the SBA 7(a) Loan Program. Guarantees benefit borrowers, on average, but redistribute surplus from low- to high-risk borrowers. Fixing government spending, an alternative policy with a 50% guarantee and a subsidy leads to an increase in borrower surplus and 0.1 percentage point (1.1%) decline in the program’s default rate.
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