The Role of Loan Commitments in Credit Allocation on the UK Small Firms Loan Guarantee Scheme

In this paper we provide empirical evidence concerning the nature of loan commitment contracts and the extent to which individual loan parameters interact with each other. Specifically, we consider how the quantitative allocation of credit, the loan amount, is affected or altered by changes to other components of the total loan package.

By doing so we shed some more light on the type of real world trade-offs that credit constrained firms might face when approaching banks for funds, using the UK governments loan guarantee programme.