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Small firms amidst COVID‐19: Financial constraints and role of government support

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  • Radeef Chundakkadan
  • Rajesh Raj Natarajan
  • Subash Sasidharan

Abstract

The coronavirus disease 2019 has severely affected the financially constrained small and medium enterprises (SMEs). In response, various countries employed several policies to support SMEs. Using rich firm‐level data from 34 countries, we study the impact of the pandemic‐led crisis on cash‐strapped SMEs and the role of governments in offsetting losses. Our results suggest that (i) government support programmes target mostly financially constrained firms; (ii) firms adjustments to the pandemic are associated with the likelihood of government support; (iii) financially constrained firms are more likely to lay off workers; and (iv) financially constrained firms layoff more male employees than female employees.

Suggested Citation

  • Radeef Chundakkadan & Rajesh Raj Natarajan & Subash Sasidharan, 2022. "Small firms amidst COVID‐19: Financial constraints and role of government support," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(3), November.
    • Handle: RePEc:bla:ecnote:v:51:y:2022:i:3:n:e12206
    DOI: 10.1111/ecno.12206
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    1. Konings, Jozef & Magerman, Glenn & Van Esbroeck, Dieter, 2023. "The impact of firm-level Covid rescue policies on productivity growth and reallocation," European Economic Review, Elsevier, vol. 157(C).

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