Policy Support and Firm Performance During the COVID-19 Pandemic: Evidence from Colombia
The pandemic hit the Colombian economy as hard as other countries. Using a novel Business Pulse Survey, this paper tests the effect of government support and COVID-19 cases on firms performance. A one-standard-deviation increase in government support (in periods in which the pandemics intensity was average) increased the percentage of firms reporting normal operations by 4.8 percent. Political demonstrations in spring 2021, however, reduced the percentage by 13 percent each month they lasted. Firms' financial distress also counters the impact of government support, suggesting the need to ease firms' access to financial markets. Last, we show that investing in digital solutions improved firms' performance but remote work degraded it.
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| Language: | English |
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Inter-American Development Bank
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| Subjects: | Small Business, Coronavirus, Pandemic, Telework, Labor Force, Economy, Loan Operation, Firm Performance, Lockdown, D22 - Firm Behavior: Empirical Analysis, L20 - Firm Objectives Organization and Behavior: General, L25 - Firm Performance: Size Diversification and Scope, O10 - Economic Development: General, COVID-19;Firm performance;Policies;Working from home;Policy support, |
| Online Access: | http://dx.doi.org/10.18235/0004622 https://publications.iadb.org/en/policy-support-and-firm-performance-during-covid-19-pandemic-evidence-colombia |
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| Summary: | The pandemic hit the Colombian economy as hard as other countries. Using a novel Business Pulse Survey, this paper tests the effect of government support and COVID-19 cases on firms performance. A one-standard-deviation increase in government support (in periods in which the pandemics intensity was average) increased the percentage of firms reporting normal operations by 4.8 percent. Political demonstrations in spring 2021, however, reduced the percentage by 13 percent each month they lasted. Firms' financial distress also counters the impact of government support, suggesting the need to ease firms' access to financial markets. Last, we show that investing in digital solutions improved firms' performance but remote work degraded it. |
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