Information Frictions and Firm Take Up of Government Support: A Randomised Controlled Experiment

32 Pages Posted: 11 Jun 2021 Last revised: 24 Aug 2021

See all articles by Claudia Custodio

Claudia Custodio

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Christopher Hansman

Imperial College Business School

Diogo Mendes

Stockholm School of Economics; Swedish House of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: July 20, 2021

Abstract

This paper studies whether informational frictions prevent firms from accessing government support using a randomized controlled trial. We focus on two Portuguese COVID-19 relief programs, providing (i) wage support for workers who are kept on payroll and (ii) credit lines backed by government guarantees. We randomly assign firms to a treatment providing either simplified information about a program, or a combination information and step-by-step application support. We find a significant treatment effect on take up of the wage support program. Our results constitute direct evidence that information frictions act as a barrier to comprehensive distribution of firm-level support measures.

Keywords: Take-up of government programs, COVID-19, SMEs, Information

JEL Classification: G38, G41

Suggested Citation

Custodio, Claudia and Hansman, Christopher and Mendes, Diogo, Information Frictions and Firm Take Up of Government Support: A Randomised Controlled Experiment (July 20, 2021). Swedish House of Finance Research Paper No. 21-15, Available at SSRN: https://ssrn.com/abstract=3857851 or http://dx.doi.org/10.2139/ssrn.3857851

Claudia Custodio

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Christopher Hansman

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

HOME PAGE: http://chrishansman.com/

Diogo Mendes (Contact Author)

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

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