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Author: Pierre-Olivier Gourinchas
Publisher:
ISBN:
Category : Business enterprises
Languages : en
Pages : 54
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Book Description
Abstract: We estimate the impact of the COVID-19 crisis on business failures among small and medium size enterprises (SMEs) in seventeen countries using a large representative firm-level database. We use a simple model of firm cost-minimization and measure each firm's liquidity shortfall during and after COVID-19. Our framework allows for a rich combination of sectoral and aggregate supply, productivity, and demand shocks. We estimate a large increase in the failure rate of SMEs under COVID-19 of nearly 9 percentage points, absent government support. Accommodation & Food Services, Arts, Entertainment & Recreation, Education, and Other Services are among the most affected sectors. The jobs at risk due to COVID-19 related SME business failures represent 3.1 percent of private sector employment. Despite the large impact on business failures and employment, we estimate only moderate effects on the financial sector: the share of Non Performing Loans on bank balance sheets would increase by up to 11 percentage points, representing 0.3 percent of banks' assets and resulting in a 0.75 percentage point decline in the common equity Tier-1 capital ratio. We evaluate the cost and effectiveness of various policy interventions. The fiscal cost of an intervention that narrowly targets at risk firms can be modest (0.54% of GDP). However, at a similar level of effectiveness, non-targeted subsidies can be substantially more expensive (1.82% of GDP). Our results have important implications for the severity of the COVID-19 recession, the design of policies, and the speed of the recovery
Author: Pierre-Olivier Gourinchas
Publisher:
ISBN:
Category : Business enterprises
Languages : en
Pages : 54
Get Book Here
Book Description
Abstract: We estimate the impact of the COVID-19 crisis on business failures among small and medium size enterprises (SMEs) in seventeen countries using a large representative firm-level database. We use a simple model of firm cost-minimization and measure each firm's liquidity shortfall during and after COVID-19. Our framework allows for a rich combination of sectoral and aggregate supply, productivity, and demand shocks. We estimate a large increase in the failure rate of SMEs under COVID-19 of nearly 9 percentage points, absent government support. Accommodation & Food Services, Arts, Entertainment & Recreation, Education, and Other Services are among the most affected sectors. The jobs at risk due to COVID-19 related SME business failures represent 3.1 percent of private sector employment. Despite the large impact on business failures and employment, we estimate only moderate effects on the financial sector: the share of Non Performing Loans on bank balance sheets would increase by up to 11 percentage points, representing 0.3 percent of banks' assets and resulting in a 0.75 percentage point decline in the common equity Tier-1 capital ratio. We evaluate the cost and effectiveness of various policy interventions. The fiscal cost of an intervention that narrowly targets at risk firms can be modest (0.54% of GDP). However, at a similar level of effectiveness, non-targeted subsidies can be substantially more expensive (1.82% of GDP). Our results have important implications for the severity of the COVID-19 recession, the design of policies, and the speed of the recovery
Author: Pierre-Olivier Gourinchas
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
We develop a flexible framework for tracking business failures during economic downturns. Our framework combines firm-level data with a model of cost-minimization where firms react to a rich set of shocks and fail if illiquid. After verifying that our methodology approximates past official failure rates, we apply it to the COVID-19 crisis in 11 countries. Absent government support, SME failures would have increased by 6.15 percentage points, representing 3.15 percent of employment. We find little threat to financial stability. Commonly implemented COVID-19 policies saved firms but were costly because funds were directed to firms that could survive without support.
Author: Pierre-Olivier Gourinchas
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization that introduces a financial friction that limits firms' borrowing capacity to smooth temporary shocks to liquidity. In this framework, firm exit arises from the interaction between this financial friction and fluctuations in cash flow due to aggregate and sectoral changes in demand conditions, as well as more traditional shocks to productivity. To evaluate the implications of our model, we use firm-level data on small and medium-sized enterprises (SMEs) in 11 European countries. We confirm that our framework is consistent with official failure rates in 2017-2019, a period characterized by standard business cycle fluctuations in demand. To capture a large liquidity shock, we apply our framework to the COVID-19 crisis. We find that, in the absence of government support, SME failure rates would have increased by 6.01 percentage points, putting 3.1 percent of employment at risk. Our results are consistent with the premise that financial frictions lead to inefficient exit as, without government support, the firms failing due to COVID-19 have similar productivity and past growth to firms that survive the COVID-19 crisis.
Author: Baporikar, Neeta
Publisher: IGI Global
ISBN: 1799874370
Category : Business & Economics
Languages : en
Pages : 628
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Book Description
The COVID-19 pandemic has affected every aspect of the modern world, and its impact is felt by all. The pandemic particularly has had a large impact on businesses as they were forced to close, supply chains were disrupted, and new health and safety precautions were adopted. As such, many businesses, especially small businesses, were faced with losses they could not afford. Governments and stakeholders across the world have thus needed to formulate various strategies and interventions to mitigate the negative consequences of the COVID-19 pandemic, particularly as they relate to small- and medium-sized enterprises (SMEs). The Handbook of Research on Strategies and Interventions to Mitigate COVID-19 Impact on SMEs is a comprehensive reference source that encapsulates the overall effect of COVID-19 on SMEs and a variety of strategies to overcome the negative effects and create more sustainable policies and organizations moving forward. The book offers a thorough overview of interventions and tactics to help organizations, entrepreneurs, and institutions of higher learning overcome the negative impact of COVID-19 while preparing policies for a more effective post-pandemic world. Covering topics that include sustainable practices for development, interventions to lessen the impact of COVID-19, and psychological resilience for SME employees, this book is Ideal for entrepreneurs, managers, executives, small businesses, family firms, academicians, scholar-practitioners, policymakers, researchers, and students.
Author: Joanna Duda
Publisher: Taylor & Francis
ISBN: 1000626210
Category : Business & Economics
Languages : en
Pages : 197
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Book Description
Entrepreneurship, Innovation, and Crisis: SME Responses to the COVID-19 Pandemic aims to address the conditions for the operations of SMEs during the time of the COVID-19 pandemic as well as the governmental support for entrepreneurs in such industries as tourism, manufacturing, recycling, education, and printing as well as the creative industry. Through the presentation of various strategies for the functioning and development of companies under crisis conditions along with new management approaches for coping with them, this book discusses the conditions for the operations of SMEs during the time of the COVID-19 pandemic as well as the support for entrepreneurs that has been offered by the governments of different countries. This approach will allow our results to be useful for a wide audience – making it especially valuable to researchers, academics, policymakers, and advanced students who are interested in crises, entrepreneurship, small and medium-sized enterprises, and strategic management.
Author: Pierre-Olivier Gourinchas
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper assesses the prospects of a 2021 time bomb in SME failures triggered by the generous support policies enacted during the 2020 COVID-19 crisis. Policies implemented in 2020, on their own, do not create a 2021 "time-bomb" for SMEs. Rather, business failures and policy costs remain modest. By contrast, credit contraction poses significant risk. Such a contraction would disproportionately impact firms that could survive COVID-19 in 2020 without any fiscal support. Even in that scenario, most business failures would not arise from excessively generous 2020 policies, but rather from the contraction of credit to the corporate sector.
Author: Tom Eisenmann
Publisher: Currency
ISBN: 0593137027
Category : Business & Economics
Languages : en
Pages : 370
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Book Description
If you want your startup to succeed, you need to understand why startups fail. “Whether you’re a first-time founder or looking to bring innovation into a corporate environment, Why Startups Fail is essential reading.”—Eric Ries, founder and CEO, LTSE, and New York Times bestselling author of The Lean Startup and The Startup Way Why do startups fail? That question caught Harvard Business School professor Tom Eisenmann by surprise when he realized he couldn’t answer it. So he launched a multiyear research project to find out. In Why Startups Fail, Eisenmann reveals his findings: six distinct patterns that account for the vast majority of startup failures. • Bad Bedfellows. Startup success is thought to rest largely on the founder’s talents and instincts. But the wrong team, investors, or partners can sink a venture just as quickly. • False Starts. In following the oft-cited advice to “fail fast” and to “launch before you’re ready,” founders risk wasting time and capital on the wrong solutions. • False Promises. Success with early adopters can be misleading and give founders unwarranted confidence to expand. • Speed Traps. Despite the pressure to “get big fast,” hypergrowth can spell disaster for even the most promising ventures. • Help Wanted. Rapidly scaling startups need lots of capital and talent, but they can make mistakes that leave them suddenly in short supply of both. • Cascading Miracles. Silicon Valley exhorts entrepreneurs to dream big. But the bigger the vision, the more things that can go wrong. Drawing on fascinating stories of ventures that failed to fulfill their early promise—from a home-furnishings retailer to a concierge dog-walking service, from a dating app to the inventor of a sophisticated social robot, from a fashion brand to a startup deploying a vast network of charging stations for electric vehicles—Eisenmann offers frameworks for detecting when a venture is vulnerable to these patterns, along with a wealth of strategies and tactics for avoiding them. A must-read for founders at any stage of their entrepreneurial journey, Why Startups Fail is not merely a guide to preventing failure but also a roadmap charting the path to startup success.
Author: Mr.Christian H Ebeke
Publisher: International Monetary Fund
ISBN: 1513570919
Category : Business & Economics
Languages : en
Pages : 48
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Book Description
The spread of COVID-19, containment measures, and general uncertainty led to a sharp reduction in activity in the first half of 2020. Europe was hit particularly hard—the economic contraction in 2020 is estimated to have been among the largest in the world—with potentially severe repercussions on its nonfinancial corporations. A wave of corporate bankruptcies would generate mass unemployment, and a loss of productive capacity and firm-specific human capital. With many SMEs in Europe relying primarily on the banking sector for external finance, stress in the corporate sector could easily translate into pressures in the banking system (Aiyar et al., forthcoming).
Author: Hamid Etemad
Publisher: Edward Elgar Publishing
ISBN: 9781802205763
Category :
Languages : en
Pages : 464
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Book Description
The international cast of authors in this important book explore how internationalizing small and medium sized enterprises (iSMEs) face major crises, such as COVID-19, and have managed them to reach a stable and desired state post-crisis. Chapter orientations vary from theoretical to empirical. Each focuses on issues related to a major crisis, and present already-deployed success strategies in 14 different country environments. The rich diversity of chapters offers a highly significant and timely contribution to the field. This book consists of five parts. An introduction to the volume and an extensive literature review open the book and are followed in Part II by general, yet critical, topics such as firm capabilities, resources and orientations, which collectively influence how smaller firms perceive emerging, approaching or unfolding crises in their environments and how the national public policy as well as the evolution of the crisis affects them. Part III extends this discussion to look at digitization and 'servitization' for higher customer and market-orientation, supply chains and overall governance. Specific research-based examples of strategies fill out Part IV and the final part offers a view beyond the current crisis. Scholars and students in entrepreneurship, international business and other related areas will find this very timely volume illuminating.
Author: Tulus T.
Publisher: Nova Science Publishers
ISBN: 9781685075033
Category : Business & Economics
Languages : en
Pages : 324
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Book Description
"This book contains empirical analysis of the impact of the COVID-19 pandemic crisis on micro, small, and medium enterprises (MSMEs) in a number of developing countries including Indonesia, India, Sri Lanka, Vietnam, Brunei Darussalam and South Africa. This book also provides an explanation of the theory of transformation channels through which the pandemic crisis has affected MSMEs"--
