Financial Support Measures and Credit to Firms During the Pandemic

Abstract

The Covid-19 pandemic has led to an abrupt disruption of economic activity. A wide range of support measures have been introduced to help firms, including public loan guarantees to ease access to credit and debt moratoria to relieve their liquidity needs. This study explores the main features of the firms that had access to these initiatives in the year starting in March 2020. The liquidity crisis has prompted many companies to apply for both, especially in the sectors hit hardest by the pandemic (trade, accommodation and food services). Medium-sized and mid-cap companies, for which access to public guarantees has been extended, have resorted to guaranteed loans extensively. Access to state-backed loans has been wider for financially solid companies; recourse to moratoria has been higher for financially vulnerable firms. Overall, government measures have supported credit during the pandemic; only for large businesses, financing has increased also for those not resorting to guarantees. This evidence suggests that without the support measures, credit restrictions would have been severe also for larger companies.

Keywords: Covid-19 pandemic, support measures, indebtedness, riskiness

JEL Classification: G32, H81