Credit constraints and the severity of COVID-19 impact: Empirical evidence from enterprise surveys

• DOI: 10.1016/j.eap.2022.03.005
• Publication Date: 2022-03-08T18:16:38Z
• Authors: Dengjun Zhang; Geir Sogn-Grundvåg
• Keywords: Empirical evidence

The COVID-19 pandemic decreases firm revenue and raises the demand for liquidity, resulting in increased financial stress firms throughout world. In attempts to mitigate impact of crisis, governments have established a range credit programs provide with poor liquidity. However, efficacy those relief has been low, funds do not reach businesses most need liquidity injection, indicating identify that are vulnerable during crisis. We first combine standard Enterprises Surveys follow-up surveys on economic consequences pandemic. sample used test how constraint conditions characteristics affect severity performance. Our empirical results indicate small limited access finance more likely be severely affected by Firms foreign ownership located cities less at-risk. Compared 2008 Global Financial Crisis, affects credit-constrained foreign-owned medium-sized enterprises (SMEs).