Growing During a Global Crisis

Shahin, Ahmad E (2021): Growing During a Global Crisis.

Abstract

Employing the data from the World Bank Enterprise surveys, we examine how the first shock of the COVID-19 pandemic has affected firm dynamics across the world. Our first group of robust models have tested the effect of internal firms’ managerial decisions and other external factors on the sales’ growth, where we found that the most important decisions are related to preserving and increasing liquidity levels, in addition to utilizing the workforce in giving more input to maintain and grow the firms’ sales. Our second group of robust models have tested the firms’ financial decisions and other external factors on the change of the firms’ liquidity levels, where we found that the firms’ liquidity levels are better protected by maintaining the relationships with financial institutions and government authorities, in addition to international firms through exporting. This paper adds to the literature through its focused examination of the immediate effect of the pandemic on firms during the months May to November 2020, while keeping a broad scope by covering 14,751 firms from 25 economies around the world

• Item Type: MPRA Paper
• Language: English
• Keywords: Firm Dynamics, Growth, Financial Survival, Financial and Managerial Decisions, Liquidity and Cash, Access to Finance, Government Financial Support, Pandemic, COVID-19, Global Crisis, Enterprise Surveys
• Subjects: D - Microeconomics > D2 - Production and Organizations > D22 - Firm Behavior: Empirical Analysis; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; H - Public Economics > H8 - Miscellaneous Issues > H84 - Disaster Aid; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics > M21 - Business Economics; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O57 - Comparative Studies of Countries

References

Acharya, V., and Steffen, S. (2020). The Risk of Being a Fallen Angel and the Corporate Dash for Cash in the Midst of COVID. The Review of Corporate Finance Studies, 9(3), 430–471. https://doi.org/10.1093/rcfs/cfaa013

Adian, I., Doumbia, D., Gregory, N., Ragoussis, A., Reddy, A., and Timmis, J. (2020). Small and Medium Enterprises in the Pandemic: Impact, Responses and the Role of Development Finance. World Bank - Policy Research Working Paper, No. 9414. https://openknowledge.worldbank.org/handle/10986/34552

Aga, G., and Maemir, H. (2021). COVID-19 and African Firms: Impact and Coping Strategies. World Bank - Policy Research Working Paper, No. 9642. https://openknowledge.worldbank.org/handle/10986/35519

Amin, M., and Viganola, D. (2021). Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic? Evidence from Firm-Level Survey Data. World Bank - Policy Research Working Paper, No. 9697. https://openknowledge.worldbank.org/handle/10986/35767

Apedo-Amah, M., Avdiu, B., Cirera, X., Cruz, M., Davies, E., Grover, A., Iacovone, L., Kilinc, U., Medvedev, D., Maduko, F., Poupakis, S., Torres, J., and Tran, T. (2020). Unmasking the Impact of COVID-19 on Businesses: Firm Level Evidence from Across the World. World Bank - Policy Research Working Paper, No. 9434. https://openknowledge.worldbank.org/handle/10986/34626

Banerjee, R., and Kharroubi, E. (2020). The financial vulnerabilities driving firms to the exit. Bank for International Settlements - BIS Quarterly Review. Published. https://www.bis.org/publ/qtrpdf/r_qt2012e.htm

Bosio, E., Djankov, S., Jolevski, F., and Ramalho, R. (2020). Survival of Firms during Economic Crisis. SSRN Electronic Journal. Published. https://doi.org/10.2139/ssrn.3588346

Buera, F., Fattal Jaef, R., Neumeyer, P., Hopenhayn, H., and Hopenhayn, Y. (2021). The Economic Ripple Effects of COVID-19. World Bank - Policy Research Working Paper, No. 9631. https://openknowledge.worldbank.org/handle/10986/35453

Fareed, F., and Overvest, B. (2021). Slowdown in business dynamics during the COVID pandemic: Empirical insights and lessons from the Netherlands. Centre for Economic Policy Research - CEPR Policy Portal. https://voxeu.org/article/slowdown-business-dynamics-during-covid-pandemic

Haidar, J. (2021). Chapter 14: How did Egypt soften the impact of COVID-19? In Shaping Africa’s Post-Covid Recovery (pp. 215–224). Centre for Economic Policy Research - CEPR Press. https://voxeu.org/content/shaping-africa-s-post-covid-recovery

Karalashvili, N., and Viganola, D. (2021). The Evolving Effect of COVID-19 on the Private Sector. World Bank Development Economics - Global Indicators Briefs No. 1. https://openknowledge.worldbank.org/handle/10986/35869

Miyakawa, D., Oikawa, K., and Ueda, K. (2021). Firm Exit during the COVID-19 Pandemic: Evidence from Japan. Journal of the Japanese and International Economies, 59. https://doi.org/10.1016/j.jjie.2020.101118

Muzi, S., Jolevski, F., Ueda, K., and Viganola, D. (2021). Productivity and Firm Exit during the COVID-19 Crisis: Cross-Country Evidence. World Bank - Policy Research Working Paper, No. 9671. https://openknowledge.worldbank.org/handle/10986/35632