Abstract

In this paper, we developed a framework for assessing the quality of credit guarantee institutions and then applied the framework to a sample of guarantee companies in China. Our results suggest that whereas macroscopic environments significantly impact the credit guarantee sector in China, scale, experience, and potential compensatory risk are the most important indicators of competence or performance capability of individual credit guarantee companies. We find that the current situation of the credit guarantee industry in China is unsatisfactory. Well-performing companies are scarce and the gap between those ranking at the top and those at the bottom is significant.

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