The Economic Impact of Credit Guarantees in Jordan

Reham Abu-baker; Mohammad Adeinat

doi:doi:10.11648/j.ijber.20200905.11

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The Economic Impact of Credit Guarantees in Jordan

Reham Abu-baker, Mohammad Adeinat

Published in International Journal of Business and Economics Research (Volume 9, Issue 5)

Received: 30 July 2020 Accepted: 13 August 2020 Published: 25 August 2020

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Abstract

Credit guarantee schemes have become a popular instrument to increase access to credit for financially constrained firms, typically small and medium-sized enterprises (SMEs). This government intervention of using credit guarantees as techniques for increasing access to finance for certain borrowers is argued to be useful, but their success and sustainability depend on many factors. Since 1994, the Jordan loan guarantee corporation through its several programs aims to support SMEs and enable them to have access to finance at a reasonable cost. This paper provides an evaluation analysis and impact assessment of credit guarantee system in Jordan by focusing on the Jordanian loan guarantee corporation (JLGC) performance. It found a positive impact on the Jordanian economy, but more emphasis on the guarantee system is needed with cooperation between all parties of the banking system, Central bank, and JLGC to achieve policy goals. Also it examines the government's recent initiative in the National Program for Finance and Loan Guarantee to encounter Corona crisis and found that it enhances the positive impact on the economy. In addition, more deep assessments that consider financial sustainability and economic additionally will be fruitful, as well as an assessment of credit guarantees against alternative policy instruments.

Published in	International Journal of Business and Economics Research (Volume 9, Issue 5)
DOI	10.11648/j.ijber.20200905.11
Page(s)	288-297
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

SMEs, Credit Guarantees, Public Guarantees, SME Financing, Access to Finance, JLGC

References

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[5]	Beck, T., A. Demirgüç-Kunt, and P. Honohan, 2008. “Finance for All? Policies and Pitfalls in Expanding Access”. World Bank, Washington, DC.
[6]	Chavis, L., Klapper, L. and Love, I. 2010. “The Impact of the Business Environment on Young firm financing”. Policy research working paper. The World Bank.
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[8]	OECD, 2013. “SME and Entrepreneurship Financing: The Role of Credit Guarantee Schemes and Mutual Guarantee Societies in Supporting Finance for Small and Medium-sized Enterprises”. OECD, Paris.
[9]	Zecchini, Salvatore and Ventura, Marco 2009. “The Impact of Public Guarantees on Credit to SMEs”. Small Business Economics, Vol. 32, No. 2, pp. 191-206.
[10]	Mendizabal, A., Zubia, M., Lertxundi, A. 2013. “Degree of guarantee rationing and banking relationship of Spanish SME”. Procedia Social and Behavioral Sciences 109 (2014) 753-757 http://dx.doi.org/10.1016/j.sbspro.2013.12.539
[11]	Levitzky, J., Ranga, N. P., 1989. “Credit Guarantee Schemes for Small and Medium Enterprises”. World Bank technical paper number 58.
[12]	Levitzky, J., 1997. “Best Practice in Credit Guarantee Schemes”. The Financier-Analyses of Capital and Money Market Transaction 4, 86-94.
[13]	Beck, T., 2010. “SME Finance: What Have We Learned and What Do We Need to Learn?” The Financial Development Report: 187-195.
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[16]	Kang, J., & Heshmati, A., 2008. “Effect of credit guarantee policy on survival and performance of SMEs in the Republic of Korea”. Small Business Economics, 31 (4), 445-462. http://dx.doi.org/10.1007/s11187-007-9049-y
[17]	Janda, K., MichalikovaI, E., Skuhrovec, J. 2012 “Credit Support for Export: Econometric Evidence from the Czech Republic” IES Working Paper 12/2012. IES FSV. Charles University. http://dx.doi.org/10.2139/ssrn.2061868
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[19]	Lawrence Oparinde, Taiwo Amos, Michael Adeseluka. 2017, “Influence of agricultural credit guarantee scheme fund (ACGSF) in fishery development in Nigeria” Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development, Vol. 17 Issue 1.
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APA Style

Reham Abu-baker, Mohammad Adeinat. (2020). The Economic Impact of Credit Guarantees in Jordan. International Journal of Business and Economics Research, 9(5), 288-297. https://doi.org/10.11648/j.ijber.20200905.11

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ACS Style

Reham Abu-baker; Mohammad Adeinat. The Economic Impact of Credit Guarantees in Jordan. Int. J. Bus. Econ. Res. 2020, 9(5), 288-297. doi: 10.11648/j.ijber.20200905.11

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AMA Style

Reham Abu-baker, Mohammad Adeinat. The Economic Impact of Credit Guarantees in Jordan. Int J Bus Econ Res. 2020;9(5):288-297. doi: 10.11648/j.ijber.20200905.11

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@article{10.11648/j.ijber.20200905.11,
  author = {Reham Abu-baker and Mohammad Adeinat},
  title = {The Economic Impact of Credit Guarantees in Jordan},
  journal = {International Journal of Business and Economics Research},
  volume = {9},
  number = {5},
  pages = {288-297},
  doi = {10.11648/j.ijber.20200905.11},
  url = {https://doi.org/10.11648/j.ijber.20200905.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20200905.11},
  abstract = {Credit guarantee schemes have become a popular instrument to increase access to credit for financially constrained firms, typically small and medium-sized enterprises (SMEs). This government intervention of using credit guarantees as techniques for increasing access to finance for certain borrowers is argued to be useful, but their success and sustainability depend on many factors. Since 1994, the Jordan loan guarantee corporation through its several programs aims to support SMEs and enable them to have access to finance at a reasonable cost. This paper provides an evaluation analysis and impact assessment of credit guarantee system in Jordan by focusing on the Jordanian loan guarantee corporation (JLGC) performance. It found a positive impact on the Jordanian economy, but more emphasis on the guarantee system is needed with cooperation between all parties of the banking system, Central bank, and JLGC to achieve policy goals. Also it examines the government's recent initiative in the National Program for Finance and Loan Guarantee to encounter Corona crisis and found that it enhances the positive impact on the economy. In addition, more deep assessments that consider financial sustainability and economic additionally will be fruitful, as well as an assessment of credit guarantees against alternative policy instruments.},
 year = {2020}
}

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TY  - JOUR
T1  - The Economic Impact of Credit Guarantees in Jordan
AU  - Reham Abu-baker
AU  - Mohammad Adeinat
Y1  - 2020/08/25
PY  - 2020
N1  - https://doi.org/10.11648/j.ijber.20200905.11
DO  - 10.11648/j.ijber.20200905.11
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 288
EP  - 297
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20200905.11
AB  - Credit guarantee schemes have become a popular instrument to increase access to credit for financially constrained firms, typically small and medium-sized enterprises (SMEs). This government intervention of using credit guarantees as techniques for increasing access to finance for certain borrowers is argued to be useful, but their success and sustainability depend on many factors. Since 1994, the Jordan loan guarantee corporation through its several programs aims to support SMEs and enable them to have access to finance at a reasonable cost. This paper provides an evaluation analysis and impact assessment of credit guarantee system in Jordan by focusing on the Jordanian loan guarantee corporation (JLGC) performance. It found a positive impact on the Jordanian economy, but more emphasis on the guarantee system is needed with cooperation between all parties of the banking system, Central bank, and JLGC to achieve policy goals. Also it examines the government's recent initiative in the National Program for Finance and Loan Guarantee to encounter Corona crisis and found that it enhances the positive impact on the economy. In addition, more deep assessments that consider financial sustainability and economic additionally will be fruitful, as well as an assessment of credit guarantees against alternative policy instruments.
VL  - 9
IS  - 5
ER  -

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Author Information

Reham Abu-baker

Department of Business Economics, School of Business, University of Jordan, Amman, Jordan
Mohammad Adeinat

Department of Business Economics, School of Business, University of Jordan, Amman, Jordan

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APA Style

Reham Abu-baker, Mohammad Adeinat. (2020). The Economic Impact of Credit Guarantees in Jordan. International Journal of Business and Economics Research, 9(5), 288-297. https://doi.org/10.11648/j.ijber.20200905.11

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ACS Style

Reham Abu-baker; Mohammad Adeinat. The Economic Impact of Credit Guarantees in Jordan. Int. J. Bus. Econ. Res. 2020, 9(5), 288-297. doi: 10.11648/j.ijber.20200905.11

Copy | Download

AMA Style

Reham Abu-baker, Mohammad Adeinat. The Economic Impact of Credit Guarantees in Jordan. Int J Bus Econ Res. 2020;9(5):288-297. doi: 10.11648/j.ijber.20200905.11

Copy | Download

@article{10.11648/j.ijber.20200905.11,
  author = {Reham Abu-baker and Mohammad Adeinat},
  title = {The Economic Impact of Credit Guarantees in Jordan},
  journal = {International Journal of Business and Economics Research},
  volume = {9},
  number = {5},
  pages = {288-297},
  doi = {10.11648/j.ijber.20200905.11},
  url = {https://doi.org/10.11648/j.ijber.20200905.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20200905.11},
  abstract = {Credit guarantee schemes have become a popular instrument to increase access to credit for financially constrained firms, typically small and medium-sized enterprises (SMEs). This government intervention of using credit guarantees as techniques for increasing access to finance for certain borrowers is argued to be useful, but their success and sustainability depend on many factors. Since 1994, the Jordan loan guarantee corporation through its several programs aims to support SMEs and enable them to have access to finance at a reasonable cost. This paper provides an evaluation analysis and impact assessment of credit guarantee system in Jordan by focusing on the Jordanian loan guarantee corporation (JLGC) performance. It found a positive impact on the Jordanian economy, but more emphasis on the guarantee system is needed with cooperation between all parties of the banking system, Central bank, and JLGC to achieve policy goals. Also it examines the government's recent initiative in the National Program for Finance and Loan Guarantee to encounter Corona crisis and found that it enhances the positive impact on the economy. In addition, more deep assessments that consider financial sustainability and economic additionally will be fruitful, as well as an assessment of credit guarantees against alternative policy instruments.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - The Economic Impact of Credit Guarantees in Jordan
AU  - Reham Abu-baker
AU  - Mohammad Adeinat
Y1  - 2020/08/25
PY  - 2020
N1  - https://doi.org/10.11648/j.ijber.20200905.11
DO  - 10.11648/j.ijber.20200905.11
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 288
EP  - 297
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20200905.11
AB  - Credit guarantee schemes have become a popular instrument to increase access to credit for financially constrained firms, typically small and medium-sized enterprises (SMEs). This government intervention of using credit guarantees as techniques for increasing access to finance for certain borrowers is argued to be useful, but their success and sustainability depend on many factors. Since 1994, the Jordan loan guarantee corporation through its several programs aims to support SMEs and enable them to have access to finance at a reasonable cost. This paper provides an evaluation analysis and impact assessment of credit guarantee system in Jordan by focusing on the Jordanian loan guarantee corporation (JLGC) performance. It found a positive impact on the Jordanian economy, but more emphasis on the guarantee system is needed with cooperation between all parties of the banking system, Central bank, and JLGC to achieve policy goals. Also it examines the government's recent initiative in the National Program for Finance and Loan Guarantee to encounter Corona crisis and found that it enhances the positive impact on the economy. In addition, more deep assessments that consider financial sustainability and economic additionally will be fruitful, as well as an assessment of credit guarantees against alternative policy instruments.
VL  - 9
IS  - 5
ER  -

Copy | Download