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Financing in times of crisis: lessons from the impact assessment of Banco Provincia's working capital credit line during the pandemic

Author

Listed:
  • Alejandro Danon

    (Universidad Nacional de Tucumán (LADPE-INVECO), Argentina; Banco de Inversión y Comercio Exterior (BICE), Argentina)

  • Rafael Tessone

    (Banco de Inversión y Comercio Exterior (BICE), Argentina)

  • Milena Valens Upegui

    (Banco Provincia, Argentina)

Abstract

The unprecedented nature of the Covid-19 pandemic generated the challenge of studying the impact of Development Bank financing in mitigating this great shock. The objective of this study is to analyze the impact, possible heterogeneous effects and the mechanism of action of the Working Capital credit line of Banco Provincia, designed to support Micro, Small and Medium Enterprises, and thus provide evidence on the effectiveness of public banking at a subnational level. The results obtained by applying a quasi-experimental methodology, which combines Propensity Score Matching with a Fixed Effects model, indicate that the companies that accessed the credit achieved a significantly higher level of employment than the control group, mitigating the effect of the pandemic. These results remain robust to controls for previous employment trajectories, exports, access to credit and are consistent in companies of different types and sizes. Furthermore, the findings are consistent with previous research conducted at the national level.

Suggested Citation

  • Alejandro Danon & Rafael Tessone & Milena Valens Upegui, 2023. "Financing in times of crisis: lessons from the impact assessment of Banco Provincia's working capital credit line during the pandemic," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(82), pages 77-97, November.
    • Handle: RePEc:bcr:ensayo:v:1:y:2023:i:82:p:77-97
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Banco Provincia; credit; employment; impact assessment; public banking; MSMEs;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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