This paper examines how mutual guarantee institutions (MGIs) affect the credit access of small firms. It finds that small firms affiliated with MGIs obtain loans at significantly lower interest rates compared to non-affiliated firms. The study shows that MGIs help mitigate information asymmetry between banks and small firms by providing better screening and monitoring. This leads to lower interest rates for affiliated firms, as banks perceive them as more creditworthy. The paper also explores how the size of MGIs and the availability of public funds influence the effectiveness of MGIs in reducing information asymmetry. Larger MGIs may initially offer lower interest rates due to better risk sharing, but beyond a certain point, the free-riding problem may outweigh the benefits. Public funds can improve or worsen the information efficiency of MGIs, depending on the context. The study concludes that MGIs play a crucial role in improving credit access for small businesses, but policy measures to expand their size should be cautious, as larger MGIs may face challenges in monitoring and screening. The findings support the use of MGIs in enhancing credit market access for small firms, particularly in regions with limited collateral and credit history.This paper examines how mutual guarantee institutions (MGIs) affect the credit access of small firms. It finds that small firms affiliated with MGIs obtain loans at significantly lower interest rates compared to non-affiliated firms. The study shows that MGIs help mitigate information asymmetry between banks and small firms by providing better screening and monitoring. This leads to lower interest rates for affiliated firms, as banks perceive them as more creditworthy. The paper also explores how the size of MGIs and the availability of public funds influence the effectiveness of MGIs in reducing information asymmetry. Larger MGIs may initially offer lower interest rates due to better risk sharing, but beyond a certain point, the free-riding problem may outweigh the benefits. Public funds can improve or worsen the information efficiency of MGIs, depending on the context. The study concludes that MGIs play a crucial role in improving credit access for small businesses, but policy measures to expand their size should be cautious, as larger MGIs may face challenges in monitoring and screening. The findings support the use of MGIs in enhancing credit market access for small firms, particularly in regions with limited collateral and credit history.