TY  - GEN
AU  - Cerda, Maikol
AU  - Gertler, Paul
AU  - Higgins, Sean
AU  - Montoya, Ana María
AU  - Parrado, Eric
AU  - Undurraga, Raimundo
TI  - The Causal Impact of Covid-19 Government-backed Loans on MSMEs Liquidity and Earnings
PY  - 2023
Y1  - 2023/02/24
DO  - 10.18235/0004754
AB  - We conducted two randomized controlled trials (RCTs) to evaluate the impact of government-guaranteed loans offered by the Chilean and Colombian governments. The public funds of these programs greatly expanded following the start of the Covid-19 pandemic and offered loans to Micro, Small and Medium Enterprises to mitigate the negative impact of the shock. Through a collaboration with private banks, we launched two experiments which offered loans to a sub-set of the 10,072 Chilean and 3,079 Colombian small businesses that took part in our experiments. Most of these firms had previously applied for a loan during the pandemic--but prior to the RCTs--but were rejected by banks due to their risk analysis of the firms. With take-up rates of 27% and 29%, respectively, we find that Covid-19 loans had a significant positive impact on the total liquidity that treated MSMEs could access: total liquidity with the formal banking system increased by 15.7% (statistically significant at the 1% level). The results of our RCTs will inform Latin American governments concerning their strategies to support MSMEs via government-backed loan programs and will shape similar public policies in the future.
UR  - https://doi.org/10.18235/0004754
ER  -