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Firm Support Measures, Credit Payment Behavior, and Credit Risk

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  • Camilo Gómez
  • Daniela Rodríguez-Novoa

Abstract

This paper examines the relationship between three government support measures (debt moratorium, credit guarantee programs, and payroll subsidies) and the firm’s payment behavior on loans in Colombia. To do so, we use the COVID-19 pandemic episode as a case study. Using highly granular data at the bank-firm level and a difference-in-difference approach, we find that firms subject to debt reliefs and government guarantee programs experienced a lower probability of default while these policies were in force. Subsequently, once the programs ended, the dynamic of the payment behavior of these firms was similar to that of those untreated. On the contrary, payroll subsidies did not affect firms’ payment behavior. Regarding the effect on banks’ risk assessment, our results suggest that banks modified debtors’ credit scores subject to relief programs since the participation status provided them with new information. **** RESUMEN: Este documento analiza la relación entre tres medidas de apoyo del gobierno (alivios financieros, programas de garantía de crédito y subsidios a la nómina) y el comportamiento de pago de los préstamos de las empresas en Colombia, utilizando la pandemia de COVID-19 como caso de estudio. Empleando datos granulares a nivel de banco-empresa y un enfoque de diferencias en diferencias, encontramos que las empresas sujetas a alivios de deuda y programas de garantía gubernamental experimentaron una menor probabilidad de incumplimiento mientras estas políticas estuvieron vigentes. Una vez finalizados los programas, la dinámica del comportamiento de pago de estas empresas fue similar a la de las que no recibieron tratamiento. Por el contrario, los subsidios a la nómina no afectaron el comportamiento de pago de las empresas. En cuanto al efecto sobre la evaluación del riesgo de los bancos, nuestros resultados sugieren que la participación en programas de ayuda proporcionó a los bancos nueva información sobre el riesgo de los deudores, lo que los llevó a modificar su calificación crediticia.

Suggested Citation

  • Camilo Gómez & Daniela Rodríguez-Novoa, 2024. "Firm Support Measures, Credit Payment Behavior, and Credit Risk," Borradores de Economia 1277, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:1277
    DOI: 10.32468/be.1277
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    More about this item

    Keywords

    firm support; credit default; credit risk; apoyo a las empresas; incumplimiento crediticio; riesgo crediticio;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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