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Firms’ participation in the Swiss COVID-19 loan programme

Author

Listed:
  • Lucas Marc Fuhrer

    (Swiss National Bank)

  • Marc-Antoine Ramelet

    (Swiss National Bank)

  • Jörn Tenhofen

    (Swiss National Bank)

Abstract

This paper analyses the determinants of firm participation in the Swiss COVID-19 loan programme, which aims to bridge firms’ liquidity shortfalls that have resulted from the pandemic. State-guaranteed COVID-19 loans are widely used by Swiss firms, with 20% of all firms participating, resulting in a sizeable programme of 2.4% of GDP. We use a comprehensive dataset to study the determinants of firm participation. Our results can be summarised as follows. First, participation was largely driven by the exposure of a firm to lockdown restrictions and to the intensity of the virus in the specific region. Second, we show that firms associated with lower liquidity ratios had a significantly higher probability of participating in the programme. Third, we find no clear evidence that firm indebtedness affected participation in the programme and no evidence that pre-existing potential “zombie firms” participated more strongly in the loan programme. Fourth, we show that the programme reached younger and smaller firms, which could be financially more vulnerable as they are less likely to obtain outside finance during a crisis. Overall, we conclude that given its objective, the programme appears to be successful.

Suggested Citation

  • Lucas Marc Fuhrer & Marc-Antoine Ramelet & Jörn Tenhofen, 2021. "Firms’ participation in the Swiss COVID-19 loan programme," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 157(1), pages 1-22, December.
    • Handle: RePEc:spr:sjecst:v:157:y:2021:i:1:d:10.1186_s41937-021-00070-4
    DOI: 10.1186/s41937-021-00070-4
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    References listed on IDEAS

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    Cited by:

    1. Catherine Casanova & Bryan Hardy & Mert Onen, 2021. "Covid-19 policy measures to support bank lending," BIS Quarterly Review, Bank for International Settlements, September.

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    More about this item

    Keywords

    COVID-19; Loan programme; Guarantees; Firm behaviour;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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