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State Secretary for Economic Affairs and Climate Policy Mona Keijzer presented the evaluation of the GO scheme carried out by Dialogic in collaboration with Erasmus University to the Dutch House of Representatives on 28th October (see letter to parliament). This scheme (established in 2009) aims to stimulate lending by providing a state guarantee on bank loans. The goal is to encourage banks to lend to medium-sized, fundamentally sound companies that struggle to obtain financing. Banks are the primary users of the scheme. Over the entire period examined from 2009 to 2018, 369 guarantees were granted to 316 unique enterprises through the GO scheme. During this period, €2.8 billion in loans were contracted under the GO. Thus, the State provided €1.4 billion in guarantees during that time. 92% of the enterprises using the GO scheme belong to the SME sector in the year of application. A temporary COVID-19 state aid framework authorised by the European Commission led to the introduction of an expanded GO-COVID module.
Dialogic has assessed the GO scheme as a legitimate instrument. The scheme has been rated as predominantly effective and assists companies with high-quality plans in obtaining financing (under acceptable conditions) that they would otherwise not have obtained or not to a sufficient extent. However, there are indications that financial additionality is highest during times of crisis and diminishes during periods of economic growth and prosperity. Regarding economic additionality, there are signs of positive effects on the business performance of enterprises with a GO guarantee. We found a strong effect on cumulative growth in total assets and more short-term positive effects on net turnover and wage bills. These findings largely align with research on similar guarantee schemes abroad, but caution is warranted when interpreting the results of the GO scheme from a methodological perspective. We also determined that the GO scheme is (becoming) increasingly efficient and professionally executed, currently cost-effective (as required by Europe), and imposes minimal administrative burdens on users (financial institutions and enterprises).
Ten recommendations have been made for possible adjustments to the GO scheme, including allowing alternative (non-bank) financiers to participate in the GO, maintaining flexibility in the guarantee ceiling, and suggesting a stronger focus on financing with social value. The State Secretary indicates that she will respond to the adjustments suggested by Dialogic (and inform the House of Representatives accordingly) after discussing them with RVO.nl, banks, and non-bank financiers.
Interested in learning more about this research? Contact Pim den Hertog.