Research Insights: Did Government-Guaranteed Loans Help MSMEs Mitigate the COVID-19 Pandemic Shock?
Peer Reviewed
Date issued
Nov 2023
Subject
Liquidity;
Coronavirus;
Bank Loan;
Pandemic;
Economy;
Small Business;
Credit Access;
Randomized Controlled Trial
JEL code
J16 - Economics of Gender • Non-labor Discrimination;
L26 - Entrepreneurship;
P52 - Comparative Studies of Particular Economies
Country
Chile;
Colombia
Category
Catalogs and Brochures
Using Chile and Colombia as case studies, we conducted two randomized controlled trials to test how government-guaranteed loans during the COVID-19 pandemic impacted firms liquidity and earnings. COVID-19 loans improved total liquidity of treated micro, small and medium-sized enterprises (MSMEs) by 15.7%. The increase in short-term liquidity may have had a positive impact on MSMEs economic performance during the pandemics economic deterioration.
