Credit Guarantee Schemes and Financial Institution Behavior after the COVID-19 Pandemic: Evidence from the 2023 RIETI Survey of Branch Managers at Regional Financial Institutions

Using the 2023 RIETI Survey of Branch Managers at Regional Financial Institutions, this paper examines changes in the relationship between credit guarantee schemes and unsecured lending after the COVID-19 pandemic and analyzes how screening behavior and personnel evaluation systems influence how credit guarantees are used. The results confirm that the expansion of fully guaranteed pandemic loans temporarily weakened the risk sharing between private financial institutions and public guarantees which was an underlying principle of previous reforms. The results also show that reliance on guaranteed lending is strongly affected by internal organizational factors, including sales targets emphasizing loan volume and engagement in business-based assessments. Furthermore, institutions that actively promote human resource development and business evaluation maintain high standards of screening and firm support while continuing to utilize credit guarantees. These findings suggest that policy design and operation of credit guarantee schemes should consider internal organizational behavior and evaluation systems within financial institutions.