Credit constraints and the severity of COVID-19 impact: Empirical evidence from enterprise surveys

Green management, access to credit, and firms’ vulnerability to the COVID-19 crisis

“…In particular, firms that have more cash and less debt exposition before the pandemic experience a lower stock price drop than those with less financial flexibility. Zhang & Sogn-Grundvåg ( 2022 ), using firm-level survey data, assess how credit constraint conditions affect the severity of the COVID-19’s impact on firms’ performance and investigate whether firms’ obstacles in access to credit, firm size, ownership, firm age, and location can be used to identify vulnerable firms during the pandemic. Their empirical results indicate that small firms and firms with limited access to finance are more likely to aspect a longer recovery from the COVID-19 shock.…”

“…Firms that faced credit access restrictions in the pre-pandemic period are more likely to experience liquidity problems and to be overdue on their obligations during the pandemic (Amin & Viganola, 2021 ; Khan, 2022 ). Prior external financing difficulties make enterprises less resilient to the pandemic shock and significantly more likely to experience a decline in sales (Zhang & Sogn-Grundvåg, 2022 ). Financial frictions exacerbate the effects of the shocks generated by the COVID-19 outbreak, by amplifying the negative effects of the pandemic on the expected sales and planned investments of credit-constrained firms (Balduzzi et al, 2020 ).…”

Are private equity and venture capital helping small and medium-sized enterprises during the COVID-19 pandemic? Evidence from China

“…Clearly, these impacts are predominantly negative. Zhang and Sogn-Grundvåg (2022) reported that the COVID-19 pandemic resulted in decreases in firm revenue and raised the demand for liquidity, thereby resulting in increased financial stress among firms worldwide, particularly small firms and firms with limited access to finance. Dai et al (2021) believed that the COVID-19 outbreak and the resultant lockdowns took a heavy toll on SMEs, which were principally afflicted by blocks in logistics, labor shortages, and drops in demand.…”

“…Especially in developing countries, SMEs have faced multiple issues: financial problems, supply chain disruption, logistic blocks, labor shortages, decreases in demand, reduction in sales and profit, etc. ( Dai et al, 2021 , Zhang and Sogn-Grundvåg, 2022 ). Shafi et al (2020) report that >83% of the affected enterprises in Pakistan were neither prepared nor had any plan of action to handle such a crisis.…”

Changes in the perception of business risks to the threat of bankruptcy due to COVID-19

“…The outbreak of the new coronavirus COVID-19 has led to a global public health catastrophe and to a global economic crisis and has severely affected industries around the world (Lu et al, 2021;Zhang & Sogn-Grundvåg, 2022). Many areas of activity were directly affected, not only tourism, passenger transport (Gazzeh et al, 2022), hospitality and catering services (Pocinho et al, 2022), but also many other negative phenomena have arisen, including fluctuations in the prices of financial instruments, information asymmetries, financial instability, corporate bankruptcies and rising unemployment (Boratynska, 2021).…”