Policies to Support Businesses through the COVID-19 Shock: A Firm Level Perspective

Abstract

Relying on a novel dataset covering more than 120,000 firms in 60 countries, this paper contributes to the debate about policies to support businesses through the COVID-19 pandemic. While governments around the world have implemented a wide range of policy support measures, evidence on the reach of these policies, the alignment of measures with firm needs, and their targeting and effectiveness remains scarce. This paper provides the most comprehensive assessment to date of these issues, focusing primarily on developing economies. It shows that policy reach has been limited, especially for more vulnerable firms and countries, and identifies mismatches between policies provided and policies most sought. It also provides some indicative evidence regarding mistargeting of policies and their effectiveness in addressing liquidity constraints and preventing layoffs. This assessment provides some early guidance to policymakers on tailoring their COVID-19 business support packages and points to new directions in data and research efforts needed to guide policy responses to the current pandemic and future crises.

COVID-19 Pandemic Implications for Corporate Sustainability and Society: A Literature Review

“…In this situation, temporary unemployment benefits from a government agency, as the EU commission suggested, including the allowance for young unemployed, are extended over a few months during the lockdown, and reimbursement for ensuring continuous employment is activated, where the government assumes the cost of employee salaries [140,141]. On the organizational level, most of the EU member states have adopted updated tax measures whereby tax deferrals are facilitated due to financial difficulties for organizations and self-employed populations, tax is postponed, and entrepreneurs are exempted from paying social security for the time being [142]. Therefore, government financial aid is essential for combating the financial distress prompted by immediate economic shocks and maintaining sustainable business development during the COVID-19 pandemic [105].…”

Determinants of the Economic Vulnerability of Businesses to Pandemics and Similar Events

“…Early lockdown and the adoption of the other measures mentioned above once an outbreak is detected is likely to be favorable to the control of the virus and to businesses as a whole. Government grants for businesses and employees most adversely affected financially by the pandemic and by government regulations to control its spread also reduce the economic vulnerability of businesses to its occurrence (Cirera et al 2021). On the other hand, it is difficult for firms to predict what public policies will be adopted for responding to pandemics.…”

“…Furthermore, the policy responses of governments to COVID-19 in different countries and jurisdictions have varied considerably. Furthermore, a study by Cirera et al (2021) found that, on the whole, government policies to provide financial support to businesses during the COVID-19 pandemic have been poor.…”

The Financial Situation of Enterprises in the Clothing and Footwear Sector in the Face of the COVID-19 Pandemic

“…The COVID-19 pandemic, referred to as the "black swan" phenomenon, is an example of an extreme threat that can lead to both an environmental, economic, and social crisis. Not only has it caused millions of infections and hundreds of thousands of deaths, but it has also wreaked havoc on the global economy (Czech et al, 2020).…”

“…Unfortunately, in many cases, these actions did not stop the layoffs of employees and the deterioration of the economic and financial situation of enterprises. Cirera et al (2020) show that access to support programs was very limited, especially in poorer countries and smaller enterprises.…”