A Guarantee Systems Classification: The Latin American Experience

Abstract

Guarantee systems are financial tools designed to mitigate the dysfunctions, within credit operations, generated from the entrepreneurs’ demand for collaterals. The present work diagnoses the unwanted effects, triggered by international rules, on the access to funds by micro, small, and medium enterprises; it posits as well the guarantee systems as solutions to these specific circumstances. Thus, it examines their legal configurations, their operational features, their relation to the financial system, and the performance levels they have achieved in Latin America. This paper has deemed virtually all the existing systems so that the results are highly significant, providing an outstanding contribution of knowledge to this field of study. This work purposes and introduces an original compilation of guarantee financial schemes, unveiling a new reality from the perspective of an empirical classification for Latin America. The set has been sorted by the different forms in which they have operated and supported the guarantee coverage on its assets or whether they have merely acted as operators and managers of an autonomous and liquid resource known as guarantee trust or fund –which is predominant within public participation schemes that not often bear the collateral coverage on their own financial equity. This classification defines and establishes diverse operational and administrative situations.