The Role of Credit Guarantee in Financing Knowledge-based Firms: Challenges Identification, Comparative Studies, and Policy Implications

Due to the importance of financing technological and innovative activities in moving toward a knowledge-based economy, Iran has used different institutional arrangements to solve the problem of financing small and medium enterprises. Although, among the different tools, the credit guarantee has attracted the attention of the policymakers in Iran, its implementation framework has not yet been well organized. In this article, the proposed strategies to enhance the role of credit guarantee in financing the country's knowledge-based companies have been extracted and evaluated based on the literature review, comparative study of selected countries and identification of the challenges of the country's credit guarantee system through the in-depth interviews with the related experts. Accordingly, the nonfulfillment of the governance role in the credit guarantee system, the lack of necessary institutional support for the evaluation, validation, and valuation of intangible assets of NTBFs, the non-admittance of funds guarantees by banks, and the lack of access to high volume loans for NTBFs have been recognized as the main challenges of the system. Also, government participation in creating accreditation infrastructure, development of reliance guarantee frameworks, designing of combined ownership models, and utilization of government participation models in risk coverage are recommended to address the aforementioned challenges.