Does better access to finance help firms deal with the COVID‐19 pandemic? Evidence from firm‐level survey data

Abstract

AbstractThe impact of the firm's pre‐pandemic financial condition on the likelihood of a decline in its sales due to the COVID‐19 pandemic in 35 developing and emerging countries is estimated. Results show that better access to finance reduces the likelihood of a decline in sales. Access to finance is more effective in arresting sales declines when firms fear that production cuts may lead to the loss of skilled workers and hard‐to‐replace input suppliers. It is less effective when workers, like women, do not wish to continue working for health or family reasons. Important policy implications are discussed.