Publication: Government Support and Firm Performance during COVID-19
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Date
2023-12-19
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Published
2023-12-19
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Abstract
This paper assesses the medium-run effects of government support to firms during the COVID-19 crisis and whether the effectiveness of this support varied with its timing. Using data from three rounds of the World Bank’s Enterprise Surveys COVID-19 Follow-up Surveys carried out between May 2020 and April 2022, it relates government support in Round 1 (received in the first half of 2020) and Round 2 (received during the second half of 2020 or early 2021) with firm performance in Round 3 (generally mid-2021). Controlling for a host of background characteristics, firms that received support in Round 1 performed better in terms of Round 3 sales, but only if they did not have continued support. Firms that also received support in Round 2 had similar Round 3 sales as those that received no support and were more likely to decrease employment. Firms that received government support only in Round 2 experienced no boost in Round 3 performance. The findings suggest that government support should be provided promptly, but it should also be phased out quickly.
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“Demirguc-Kunt, Asli; Singer, Dorothe; Bruhn, Miriam. 2023. Government Support and Firm Performance during COVID-19. Policy Research Working Paper; 10641. © World Bank. http://hdl.handle.net/10986/40769 License: CC BY 3.0 IGO.”
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