Financing Firms in Hibernation During the COVID-19 Pandemic
The coronavirus (COVID-19) pandemic has imposed a heavy toll on economies worldwide, nearly halting economic activity. Although most firms should be viable when economic activity resumes, cash flows have collapsed, possibly triggering inefficient bankruptcies with long-term detrimental effects. Firms' valuable relationships with workers, suppliers, customers, governments, and creditors could be broken. Hibernation could slow the economy until the pandemic is brought under control and preserve those vital relationships for a quicker recovery. If all stakeholdersshare the burden of economic inactivity, firms are more likely to survive. Financing could help cover firms' reduced operational costs until the pandemic subdues. But financial systems are not well equipped to handle this type of exogenous and synchronized systemic shock. Governments could work with the financial sector to keep firms afloat, enabling forbearance as needed and absorbing part of the firms' increased credit risk, by implementing policies with proper incentives to keep firms viable.
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Format: | Policy Note biblioteca |
Language: | English |
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World Bank, Washington, DC
2020-04-13
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Subjects: | SMALL AND MEDIUM-SIZED ENTERPRISES, ACCESS TO FINANCE, PUBLIC FINANCE, DEBT, COVID-19, CORONAVIRUS, ECONOMIC SHOCK, PANDEMIC, STOCK MARKET INDEX, ECONOMIC CRISIS, DEBT CRISIS, CREDIT, SME FINANCE, MONETARY POLICY, RISK MANAGEMENT, PUBLIC GUARANTEE, |
Online Access: | http://documents.worldbank.org/curated/en/228811586799856319/Financing-Firms-in-Hibernation-During-the-COVID-19-Pandemic https://hdl.handle.net/10986/33611 |
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dig-okr-10986336112024-08-07T18:55:36Z Financing Firms in Hibernation During the COVID-19 Pandemic Huneeus, Federico Didier, Tatiana Larrain, Mauricio Schmukler, Sergio L. SMALL AND MEDIUM-SIZED ENTERPRISES ACCESS TO FINANCE PUBLIC FINANCE DEBT COVID-19 CORONAVIRUS ECONOMIC SHOCK PANDEMIC STOCK MARKET INDEX ECONOMIC CRISIS DEBT CRISIS CREDIT SME FINANCE MONETARY POLICY RISK MANAGEMENT PUBLIC GUARANTEE The coronavirus (COVID-19) pandemic has imposed a heavy toll on economies worldwide, nearly halting economic activity. Although most firms should be viable when economic activity resumes, cash flows have collapsed, possibly triggering inefficient bankruptcies with long-term detrimental effects. Firms' valuable relationships with workers, suppliers, customers, governments, and creditors could be broken. Hibernation could slow the economy until the pandemic is brought under control and preserve those vital relationships for a quicker recovery. If all stakeholdersshare the burden of economic inactivity, firms are more likely to survive. Financing could help cover firms' reduced operational costs until the pandemic subdues. But financial systems are not well equipped to handle this type of exogenous and synchronized systemic shock. Governments could work with the financial sector to keep firms afloat, enabling forbearance as needed and absorbing part of the firms' increased credit risk, by implementing policies with proper incentives to keep firms viable. 2020-04-17T14:52:08Z 2020-04-17T14:52:08Z 2020-04-13 Policy Note Document de politique générale Documento de políticas http://documents.worldbank.org/curated/en/228811586799856319/Financing-Firms-in-Hibernation-During-the-COVID-19-Pandemic https://hdl.handle.net/10986/33611 English Research and Policy Briefs,no. 30; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank application/pdf text/plain World Bank, Washington, DC |
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biblioteca |
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America del Norte |
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Biblioteca del Banco Mundial |
language |
English |
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SMALL AND MEDIUM-SIZED ENTERPRISES ACCESS TO FINANCE PUBLIC FINANCE DEBT COVID-19 CORONAVIRUS ECONOMIC SHOCK PANDEMIC STOCK MARKET INDEX ECONOMIC CRISIS DEBT CRISIS CREDIT SME FINANCE MONETARY POLICY RISK MANAGEMENT PUBLIC GUARANTEE SMALL AND MEDIUM-SIZED ENTERPRISES ACCESS TO FINANCE PUBLIC FINANCE DEBT COVID-19 CORONAVIRUS ECONOMIC SHOCK PANDEMIC STOCK MARKET INDEX ECONOMIC CRISIS DEBT CRISIS CREDIT SME FINANCE MONETARY POLICY RISK MANAGEMENT PUBLIC GUARANTEE |
spellingShingle |
SMALL AND MEDIUM-SIZED ENTERPRISES ACCESS TO FINANCE PUBLIC FINANCE DEBT COVID-19 CORONAVIRUS ECONOMIC SHOCK PANDEMIC STOCK MARKET INDEX ECONOMIC CRISIS DEBT CRISIS CREDIT SME FINANCE MONETARY POLICY RISK MANAGEMENT PUBLIC GUARANTEE SMALL AND MEDIUM-SIZED ENTERPRISES ACCESS TO FINANCE PUBLIC FINANCE DEBT COVID-19 CORONAVIRUS ECONOMIC SHOCK PANDEMIC STOCK MARKET INDEX ECONOMIC CRISIS DEBT CRISIS CREDIT SME FINANCE MONETARY POLICY RISK MANAGEMENT PUBLIC GUARANTEE Huneeus, Federico Didier, Tatiana Larrain, Mauricio Schmukler, Sergio L. Financing Firms in Hibernation During the COVID-19 Pandemic |
description |
The coronavirus (COVID-19) pandemic has
imposed a heavy toll on economies worldwide, nearly halting
economic activity. Although most firms should be viable when
economic activity resumes, cash flows have collapsed,
possibly triggering inefficient bankruptcies with long-term
detrimental effects. Firms' valuable relationships with
workers, suppliers, customers, governments, and creditors
could be broken. Hibernation could slow the economy until
the pandemic is brought under control and preserve those
vital relationships for a quicker recovery. If all
stakeholdersshare the burden of economic inactivity, firms
are more likely to survive. Financing could help cover
firms' reduced operational costs until the pandemic
subdues. But financial systems are not well equipped to
handle this type of exogenous and synchronized systemic
shock. Governments could work with the financial sector to
keep firms afloat, enabling forbearance as needed and
absorbing part of the firms' increased credit risk, by
implementing policies with proper incentives to keep firms viable. |
format |
Policy Note |
topic_facet |
SMALL AND MEDIUM-SIZED ENTERPRISES ACCESS TO FINANCE PUBLIC FINANCE DEBT COVID-19 CORONAVIRUS ECONOMIC SHOCK PANDEMIC STOCK MARKET INDEX ECONOMIC CRISIS DEBT CRISIS CREDIT SME FINANCE MONETARY POLICY RISK MANAGEMENT PUBLIC GUARANTEE |
author |
Huneeus, Federico Didier, Tatiana Larrain, Mauricio Schmukler, Sergio L. |
author_facet |
Huneeus, Federico Didier, Tatiana Larrain, Mauricio Schmukler, Sergio L. |
author_sort |
Huneeus, Federico |
title |
Financing Firms in Hibernation During the COVID-19 Pandemic |
title_short |
Financing Firms in Hibernation During the COVID-19 Pandemic |
title_full |
Financing Firms in Hibernation During the COVID-19 Pandemic |
title_fullStr |
Financing Firms in Hibernation During the COVID-19 Pandemic |
title_full_unstemmed |
Financing Firms in Hibernation During the COVID-19 Pandemic |
title_sort |
financing firms in hibernation during the covid-19 pandemic |
publisher |
World Bank, Washington, DC |
publishDate |
2020-04-13 |
url |
http://documents.worldbank.org/curated/en/228811586799856319/Financing-Firms-in-Hibernation-During-the-COVID-19-Pandemic https://hdl.handle.net/10986/33611 |
work_keys_str_mv |
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_version_ |
1807155404088541184 |