The Impact of Generous Financial Support on Firm Entry and Exit in the Restaurant Industry during the COVID-19 Pandemic

70 Pages Posted: 29 Jan 2022 Last revised: 14 Oct 2022

See all articles by Masato Oikawa

Masato Oikawa

Waseda University - Faculty of Education and Integrated Arts and Sciences; Waseda University - Waseda Institute of Social and Human Capital Studies (WISH)

Koichiro Onishi

Waseda University - Faculty of Education and Integrated Arts and Sciences

Date Written: January 27, 2022

Abstract

This study examines the impact of governmental generous financial support for restaurants that reduced their business hours on the entry and exit of dine-in restaurants during the coronavirus disease 2019 pandemic. Our descriptive analysis results show that the number of entries and exits during the pandemic are comparable to those in the previous year. Using monthly municipality-level panel data and a difference-in-differences estimation, we find an increase in the entries and a decrease in the exits of dine-in restaurants after December 2020, when the local governments generously expanded their financial support. This generous financial support led to excessive entries.

Keywords: COVID-19; entry and exit; government support; restaurant industry

JEL Classification: H32, L20, L83, M13

Suggested Citation

Oikawa, Masato and Onishi, Koichiro, The Impact of Generous Financial Support on Firm Entry and Exit in the Restaurant Industry during the COVID-19 Pandemic (January 27, 2022). Available at SSRN: https://ssrn.com/abstract=4019417 or http://dx.doi.org/10.2139/ssrn.4019417

Masato Oikawa (Contact Author)

Waseda University - Faculty of Education and Integrated Arts and Sciences ( email )

1-6-1 Nishi-waseda
Shinjuku-ku
Tokyo, 1698050
Japan

Waseda University - Waseda Institute of Social and Human Capital Studies (WISH)

Japan

Koichiro Onishi

Waseda University - Faculty of Education and Integrated Arts and Sciences ( email )

1-6-1 Nishi-waseda
Shinjuku-ku
Tokyo, 1698050
Japan

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