The arguments of critics of the bank guarantee system can be summarized as follows:

One of the main criticisms that bank guarantees receive is the one related to its effect on savings. When a user is under bank guarantee, he or she is not motivated to keep savings because the guarantee covers for expenses not pain.

The characterizations of unnecessary and ineffective apply primarily to public and centralized bank guarantees that are managed in a bureaucratic way.

Most bank guarantee systems rely on the principle of joint guarantee. The drawback of this system is that is not cost effective in relation to the management costs. Bank guarantees should be given in relation with each case.

There have been efforts to evaluate the effectiveness of bank guarantees through studies. The challenges have mostly been around the collection of feasible and relevant information. In spite of the difficulties, the common thread is the importance of the use of collateral to reduce risk.

In general, these studies have concluded that access to credit for small business is an inconvenience. They show that when the market is at the worst state of development, it becomes harder for micro, small and medium business to find sources of credit.

The challenge is to design projects that improve the relationship between the demand for micro-financing and provision of corresponding institutional credit. This objective requires the support of a widely dispersed customer base, especially in rural areas and strengthening of financial intermediaries (micro-finance institutions) which bring together the customer base and credit institutions. The bank guarantee programs have proven very useful in establishing this connection.

Bank guarantees have been less effective in countries whose governments provide subsidies to small credits. When bank guarantees are subsidized, people tend to save more and increase their dependency to the government.

There is a second generation of bank guarantee systems which gives greater weight to loans that follow the market interest rates, the repayment of credit and savings mobilization that can serve as a guarantee fund for local risk sharing.

Subsidies are more productive in a society when they are applied directly to bank guarantees instead of being applied to interest rates. Subsidies create dependency and limit savings.