Emergency-aid for self-employed in the Covid-19 pandemic: A flash in the pan?

Block, Joern; Kritikos, Alexander S.; Priem, Maximilian; Stiel, Caroline

doi:10.1016/j.joep.2022.102567

Cited by 18 publications

(16 citation statements)

References 97 publications

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“…Finally, from a global perspective, future research could compare the effectiveness of the PPP relative to other government efforts (Hale et al, 2021 ). For example, Block et al, ( 2022a , b ) and Dörr et al ( 2022 ) consider how financial assistance in Germany helped small businesses. With a strong beer industry and a growing presence of small brewers (Statista, 2021 ), one interesting avenue could be replicating the analysis presented here with a dataset of German producers.…”

Section: Discussionmentioning

confidence: 99%

The Paycheck Protection Program and small business performance: Evidence from craft breweries

Staples

Krumel

2022

Small Bus Econ

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The Paycheck Protection Program (PPP) provided approximately US $790 billion in COVID-19 relief funds to small businesses across the United States. This study merges a verified industry dataset of craft beer producers with government microdata on PPP loan recipients to examine the relationship between PPP funding and small business performance during the pandemic. Results indicate that firms receiving PPP funding were more likely to remain in operation and experience a smaller decline in annual production. However, even within a single industry, COVID-19 had heterogeneous effects on different market segments, demonstrating the importance of a firm’s pre-pandemic business model on its flexibility and resiliency during a crisis. Finally, using a quasi-experiment that exploits a natural break in the loan program, the study suggests a positive causal effect of the role of loan approval timing on short-run performance outcomes. These findings provide evidence that the PPP alleviated some losses induced by COVID-19, but questions remain about the program’s distribution and long-term impacts. Plain English Summary The US federal government created the Paycheck Protection Program (PPP) to minimize the economic damages from COVID-19 on workers and small businesses. One industry hit particularly hard by the pandemic was the craft brewing industry, making it an ideal industry to explore whether the PPP achieved its objectives. The results show that receiving a PPP loan increased the likelihood of remaining in business through the pandemic. Additionally, while most craft breweries experienced a decline in annual production from 2019 to 2020, firms that received a PPP loan experienced a smaller reduction. Breweries that received the earliest funding also performed better, suggesting that loan timing played a key role in performance outcomes. Taken together, the study suggests that the government program helped reduce economic damages associated with COVID-19, but more work is needed to fully understand the program’s impact. Supplementary Information The online version contains supplementary material available at 10.1007/s11187-022-00717-3.

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Section: Discussionmentioning

confidence: 99%

The Paycheck Protection Program and small business performance: Evidence from craft breweries

Staples

Krumel

2022

Small Bus Econ

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“…For China, Liu et al (2022) show the supportive role of Chinese state-owned banks on small businesses' lines of credit where a broad policy mix was introduced consisting of loan guarantees, direct lending to small businesses, grants, and equity instruments. Block et al (2022b) for Germany, and Belghitar et al (2022) for the UK investigate the effects of governmental policies for SMEs during COVID-19, and examine whether these interventions affected their ability to survive the pandemic. Dörr et al (2022) point to the downside of such policies as they claim to have detected an insolvency gap that is characterized by firms that were already struggling before the pandemic.…”

Section: Existing Research On Self-employment During the Covid-19 Pan...mentioning

confidence: 99%

“…The data set contains rich information on the self-employed persons' financial situation, subjective future prospects, their willingness to apply for government support programs, the application process and outcome regarding the emergency aid program, as well as socio-demographic and business characteristics including details on the ventures' digitalization level. Block et al (2022b) give a detailed description of the survey setup and present various descriptive statistics. Importantly, they show that the applicants for the emergency aid program were severely affected by the crisis and that they expected financial hardship to continue for at least 6 months.…”

Section: Survey Datamentioning

confidence: 99%

German Financial State Aid During Covid-19 Pandemic: Higher Impact Among Digitalized Self-Employed

et al. 2022

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“…Evidence about the effectiveness of government support and its allocation has been mixed in aggregate terms. Emergency aid for the self-employed in Germany was effective for their survival probability, but this effect faded out quickly after distribution (Block et al 2021). In the UK, government mitigation schemes have reduced the number of SMEs with negative earnings and extended the length that they could survive, however, the most affected sectors were not the ones which benefited most (Belghitar, Moro, and Radić 2021).…”

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confidence: 99%

The effects of COVID-19 on businesses

Stemmler¹

2022

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This paper analyzes how a specific differentiation by governments throughout the world -whether a sector was deemed "essential" or "key" -affected firm performance. During the COVID-19 pandemic, governments designated specific services as "essential," which allowed firms operating in those sectors to remain (partially) open as well as being granted other preferential treatment. This paper analyses the effects of the key-status, by mapping the countries' lists to the sectoral level, and matching these sectors with firm-level Covid-19 survey data from 27 countries. The findings reveal that, controlling for a rich set of firm-level and sectoral characteristics, firms deemed key less often reported declining sales and demand for their goods or services, and had a smaller number of furloughed workers. Nonetheless, non-key firms were more likely to employ online business activities and to change the main product or service they offered, reflecting the necessity to otherwise adjust to the economic downturn and changes in demand.

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Emergency-aid for self-employed in the Covid-19 pandemic: A flash in the pan?

Cited by 18 publications

References 97 publications

The Paycheck Protection Program and small business performance: Evidence from craft breweries

The Paycheck Protection Program and small business performance: Evidence from craft breweries

German Financial State Aid During Covid-19 Pandemic: Higher Impact Among Digitalized Self-Employed

The effects of COVID-19 on businesses

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