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Government policies and firm performance in the COVID-19 pandemic era: a sectoral analysis

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  • Danny Turkson

    (University of North Carolina at Chapel Hill)

  • Nana Boakyewaa Addai

    (University of North Carolina at Greensboro)

  • Farhat Chowdhury

    (University of North Carolina at Greensboro)

  • Fatima Mohammed

    (University of North Carolina at Greensboro)

Abstract

The effect of the COVID-19 pandemic has been severely detrimental to most firms. Preliminary estimates from Italy, which experienced the worst devastation from the virus during the early days of the pandemic, predicted that the country could lose at least $8.3 bn in the service and manufacturing sectors due to the coronavirus pandemic. Although there has been a series of ongoing government policies to mitigate the economic effect of the pandemic, we do not know to what extent these policies have been effective. Using two-period panel data (before and during the pandemic) on 419 Italian firms, this study examines the impact of government policies on firms using first difference estimation. The results show that firms that received a government grant in relation to the COVID-19 pandemic saw on average an 11% increase in sales revenue by the end of June 2020 compared to those yet to receive grants. A sectoral decomposition of the analysis indicates government policy to be effective in the services sector if performance is measured by sales revenue.

Suggested Citation

  • Danny Turkson & Nana Boakyewaa Addai & Farhat Chowdhury & Fatima Mohammed, 2021. "Government policies and firm performance in the COVID-19 pandemic era: a sectoral analysis," SN Business & Economics, Springer, vol. 1(12), pages 1-22, December.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:12:d:10.1007_s43546-021-00170-6
    DOI: 10.1007/s43546-021-00170-6
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    References listed on IDEAS

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    1. Didier, Tatiana & Huneeus, Federico & Larrain, Mauricio & Schmukler, Sergio L., 2021. "Financing firms in hibernation during the COVID-19 pandemic," Journal of Financial Stability, Elsevier, vol. 53(C).
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    Cited by:

    1. Lasha Labadze & Mohamed M. Sraieb, 2023. "Impact of Anti-Pandemic Policy Stringency on Firms’ Profitability during COVID-19," Sustainability, MDPI, vol. 15(3), pages 1-15, January.

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