Keywords: Mutual Guarantee Institutions, Mutual Loan Guarantee Society, Small Firms Financing Collateral, Credit Guarantee Schemes, Group Lending, Sicily
Mutual Guarantee Institutions (MGIs) are an useful instrument for small firms to overcome the difficulties in accessing the credit market. They provide collateral for loan to their affiliated. Firms use to resort to MGIs in order to improve the availability of credit, reduce the borrowing costs and access to public aids. MGIs represent to the banks a way to reduce informational asymmetries: mutual links like supply relations help to bring out confidential information useful to assess the creditworthness of small borrowers and reduce the credit risk of financial institutions grating a loan. The evolution of the normative context encourages the capital reinforcement of the MGIs by means of expansion of their shareholder base or M&A operations. After recent regulatory changes personal guarantees provided by a MGI are eligible for mitigating the risk and reducing the credit exposure of the bank lender when calculating its capital requirement only if the MGI is so large as to be under supervision like banks. In Sicily there is a plethora of small MGIs and only a few M&A operations have been done. Their activity is growing but, if they will not be able to achieve the minimal requirements to be under supervision, the risk of being marginalized will be reduced only in presence of public counter guarantees or if they offer complex services.