Credit guarantee funds and mutual guarantee systems
to provide lending institutions with money to compensate for the losses sustained when borrowers default on loans. Mutual guarantee systems are more decentralized: they involve a group of people coming together to undertake a common guarantee for a loan application for one of their members.This
article describes the range of guarantee schemes which have been in operation in France, Italy, elsewhere in Europe and Japan, and draws together some points fundamental to the success of such schemes. It then describes how similar schemes have been attempted in Kenya, the Philippines and
elsewhere in the developing world.
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