Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data
The advent of the novel coronavirus (COVID-19) pandemic has led to a severe liquidity crunch among private firms. Yet, formal analysis of the impact of a liquidity crunch or access to finance on the performance of firms during the pandemic is limit...
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/149521623695272230/Does-Better-Access-to-Finance-Help-Firms-Deal-with-the-COVID-19-Pandemic-Evidence-from-Firm-Level-Survey-Data http://hdl.handle.net/10986/35767 |
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okr-10986-357672021-06-18T05:10:56Z Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data Amin, Mohammad Viganola, Domenico ACCESS TO FINANCE FIRM PERFORMANCE SALES REVENUE CORONAVIRUS COVID-19 PANDEMIC RESPONSE LIQUIDITY CRUNCH The advent of the novel coronavirus (COVID-19) pandemic has led to a severe liquidity crunch among private firms. Yet, formal analysis of the impact of a liquidity crunch or access to finance on the performance of firms during the pandemic is limited. The present paper estimates the impact of access to finance in the period before the pandemic on the likelihood of a decline in sales of the firm during the pandemic. The results show a strong connection between the two. That is, firms with better access to finance are significantly less likely to experience a decline in sales, and this relationship is highly heterogenous. First, better access to finance reduces the likelihood of a decline in sales much more for firms that have a stronger long-standing relationship with important stakeholders such as skilled workers and input suppliers. These are firms that use more skilled relative to unskilled workers, firms in industries with a more complex network of input suppliers, and firms in countries where the cost of enforcing contracts with new input suppliers is high. Second, the impact of access to finance is less among firms that use more women relative to men workers. This is especially so in countries or societies that accord a higher value to women’s caregiving role than to their work outside the home. The paper argues that both of these heterogeneities are along expected lines and derive from the specific ways in which access to finance benefits firms in fighting the pandemic. Thus, they help to raise confidence against endogeneity concerns about the main results. 2021-06-17T16:19:31Z 2021-06-17T16:19:31Z 2021-06 Working Paper http://documents.worldbank.org/curated/en/149521623695272230/Does-Better-Access-to-Finance-Help-Firms-Deal-with-the-COVID-19-Pandemic-Evidence-from-Firm-Level-Survey-Data http://hdl.handle.net/10986/35767 English Policy Research Working Paper;No. 9697 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCESS TO FINANCE FIRM PERFORMANCE SALES REVENUE CORONAVIRUS COVID-19 PANDEMIC RESPONSE LIQUIDITY CRUNCH |
| spellingShingle |
ACCESS TO FINANCE FIRM PERFORMANCE SALES REVENUE CORONAVIRUS COVID-19 PANDEMIC RESPONSE LIQUIDITY CRUNCH Amin, Mohammad Viganola, Domenico Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data |
| relation |
Policy Research Working Paper;No. 9697 |
| description |
The advent of the novel coronavirus
(COVID-19) pandemic has led to a severe liquidity crunch
among private firms. Yet, formal analysis of the impact of a
liquidity crunch or access to finance on the performance of
firms during the pandemic is limited. The present paper
estimates the impact of access to finance in the period
before the pandemic on the likelihood of a decline in sales
of the firm during the pandemic. The results show a strong
connection between the two. That is, firms with better
access to finance are significantly less likely to
experience a decline in sales, and this relationship is
highly heterogenous. First, better access to finance reduces
the likelihood of a decline in sales much more for firms
that have a stronger long-standing relationship with
important stakeholders such as skilled workers and input
suppliers. These are firms that use more skilled relative to
unskilled workers, firms in industries with a more complex
network of input suppliers, and firms in countries where the
cost of enforcing contracts with new input suppliers is
high. Second, the impact of access to finance is less among
firms that use more women relative to men workers. This is
especially so in countries or societies that accord a higher
value to women’s caregiving role than to their work outside
the home. The paper argues that both of these
heterogeneities are along expected lines and derive from the
specific ways in which access to finance benefits firms in
fighting the pandemic. Thus, they help to raise confidence
against endogeneity concerns about the main results. |
| format |
Working Paper |
| author |
Amin, Mohammad Viganola, Domenico |
| author_facet |
Amin, Mohammad Viganola, Domenico |
| author_sort |
Amin, Mohammad |
| title |
Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data |
| title_short |
Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data |
| title_full |
Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data |
| title_fullStr |
Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data |
| title_full_unstemmed |
Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data |
| title_sort |
does better access to finance help firms deal with the covid-19 pandemic? evidence from firm-level survey data |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/en/149521623695272230/Does-Better-Access-to-Finance-Help-Firms-Deal-with-the-COVID-19-Pandemic-Evidence-from-Firm-Level-Survey-Data http://hdl.handle.net/10986/35767 |
| _version_ |
1764483734459908096 |