IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v149y2025ics0264999325000823.html

Spatial interactions and micro-enterprises’ uptake of COVID-19 financial aid: Evidence from a spatial hurdle probit model

Author

Listed:
  • Tomelleri, Alessio
  • Billé, Anna Gloria

Abstract

This study examines the impact of spatial interactions on local government financial aid uptake among micro-enterprises (MEs) during the COVID-19 pandemic. While government support measures played a critical role in mitigating the crisis, the extent to which eligible firms applied for these benefits remains understudied. Using a representative survey of MEs in Trentino, Italy, linked to administrative data, we employ a spatial hurdle probit model to assess how information sharing among firms influences uptake decisions. Results show that MEs with similar levels of pre-pandemic economic performance in terms of value added tend to reciprocally influence each other in deciding to ask for public aid, with spatial interactions particularly significant in peripheral areas. Our findings highlight the importance of peer effects in shaping firms’ responses to public support measures, offering insights for policymakers aiming to improve the accessibility and effectiveness of financial aid programs.

Suggested Citation

  • Tomelleri, Alessio & Billé, Anna Gloria, 2025. "Spatial interactions and micro-enterprises’ uptake of COVID-19 financial aid: Evidence from a spatial hurdle probit model," Economic Modelling, Elsevier, vol. 149(C).
    • Handle: RePEc:eee:ecmode:v:149:y:2025:i:c:s0264999325000823
    DOI: 10.1016/j.econmod.2025.107087
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999325000823
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2025.107087?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Calabrese, Raffaella, 2023. "Contagion effects of UK small business failures: A spatial hierarchical autoregressive model for binary data," European Journal of Operational Research, Elsevier, vol. 305(2), pages 989-997.
    2. Julian Oliver Dörr & Georg Licht & Simona Murmann, 2022. "Small firms and the COVID-19 insolvency gap," Small Business Economics, Springer, vol. 58(2), pages 887-917, February.
    3. McPherson, Michael A., 1996. "Growth of micro and small enterprises in southern Africa," Journal of Development Economics, Elsevier, vol. 48(2), pages 253-277, March.
    4. Li, Meng, 2021. "Did the small business administration’s COVID-19 assistance go to the hard hit firms and bring the desired relief?," Journal of Economics and Business, Elsevier, vol. 115(C).
    5. Fasano, Francesco & Javier Sánchez-Vidal, F. & La Rocca, Maurizio, 2022. "The role of government policies for Italian firms during the COVID-19 crisis," Finance Research Letters, Elsevier, vol. 50(C).
    6. Kelejian, Harry H. & Prucha, Ingmar R., 2010. "Specification and estimation of spatial autoregressive models with autoregressive and heteroskedastic disturbances," Journal of Econometrics, Elsevier, vol. 157(1), pages 53-67, July.
    7. Qu, Xi & Lee, Lung-fei, 2015. "Estimating a spatial autoregressive model with an endogenous spatial weight matrix," Journal of Econometrics, Elsevier, vol. 184(2), pages 209-232.
    8. Donald J. Lacombe & James P. LeSage, 2018. "Use and interpretation of spatial autoregressive probit models," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 60(1), pages 1-24, January.
    9. Lalinsky, Tibor & Pál, Rozália, 2022. "Distribution of COVID-19 government support and its consequences for firm liquidity and solvency," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 305-335.
    10. Regina T. Riphahn, 2001. "Rational Poverty or Poor Rationality? The Take‐up of Social Assistance Benefits," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(3), pages 379-398, September.
    11. Yao, Zhigang & Liu, Yao, 2023. "How Covid-19 impacts the financing in SMEs: Evidence from private firms," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 1046-1056.
    12. Arbia, Giuseppe & Battisti, Michele & Di Vaio, Gianfranco, 2010. "Institutions and geography: Empirical test of spatial growth models for European regions," Economic Modelling, Elsevier, vol. 27(1), pages 12-21, January.
    13. Maté-Sánchez-Val, Mariluz & López-Hernandez, Fernando & Rodriguez Fuentes, Christian Camilo, 2018. "Geographical factors and business failure: An empirical study from the Madrid metropolitan area," Economic Modelling, Elsevier, vol. 74(C), pages 275-283.
    14. Emanuela Galasso & Martin Ravallion & Agustin Salvia, 2004. "Assisting the Transition from Workfare to Work: A Randomized Experiment," ILR Review, Cornell University, ILR School, vol. 58(1), pages 128-142, October.
    15. Anna Gloria Billé & Massimiliano Caporin, 2022. "Impact of COVID-19 on financial returns: a spatial dynamic panel data model with random effects," Journal of Spatial Econometrics, Springer, vol. 3(1), pages 1-21, December.
    16. Viral V Acharya & Robert Engle & Maximilian Jager & Sascha Steffen, 2024. "Why Did Bank Stocks Crash during COVID-19?," The Review of Financial Studies, Society for Financial Studies, vol. 37(9), pages 2627-2684.
    17. Nichter, Simeon & Goldmark, Lara, 2009. "Small Firm Growth in Developing Countries," World Development, Elsevier, vol. 37(9), pages 1453-1464, September.
    18. Ondřej Dvouletý & Stjepan Srhoj & Smaranda Pantea, 2021. "Public SME grants and firm performance in European Union: A systematic review of empirical evidence," Small Business Economics, Springer, vol. 57(1), pages 243-263, June.
    19. Anna Gloria Billé & Samantha Leorato, 2020. "Partial ML estimation for spatial autoregressive nonlinear probit models with autoregressive disturbances," Econometric Reviews, Taylor & Francis Journals, vol. 39(5), pages 437-475, May.
    20. Janzen, Benedikt & Radulescu, Doina, 2022. "Effects of COVID-19 related government response stringency and support policies: Evidence from European firms," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 129-145.
    21. Suresh de Mel & David McKenzie & Christopher Woodruff, 2010. "Wage Subsidies for Microenterprises," American Economic Review, American Economic Association, vol. 100(2), pages 614-618, May.
    22. Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
    23. Bannò, Mariasole & Sgobbi, Francesca, 2010. "Firm participation in financial incentive programmes: The case of subsidies for outward internationalisation," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 792-803, November.
    24. Daniele Spinelli, 2022. "Fitting spatial autoregressive logit and probit models using Stata: The spatbinary command," Stata Journal, StataCorp LLC, vol. 22(2), pages 293-318, June.
    25. Monica Roman, 2019. "Work and welfare take-up of enlargement migrants in the United Kingdom," Applied Economics Letters, Taylor & Francis Journals, vol. 26(5), pages 341-344, March.
    26. Anna Gloria Billé, 2013. "Computational Issues in the Estimation of the Spatial Probit Model: A Comparison of Various Estimators," The Review of Regional Studies, Southern Regional Science Association, vol. 43(2,3), pages 131-154, Winter.
    27. Mark M. Fleming, 2004. "Techniques for Estimating Spatially Dependent Discrete Choice Models," Advances in Spatial Science, in: Luc Anselin & Raymond J. G. M. Florax & Sergio J. Rey (ed.), Advances in Spatial Econometrics, chapter 7, pages 145-168, Springer.
    28. Huttunen, Kristiina & Pirttilä, Jukka & Uusitalo, Roope, 2013. "The employment effects of low-wage subsidies," Journal of Public Economics, Elsevier, vol. 97(C), pages 49-60.
    29. Bandyopadhyay, Simanti & Kabiraj, Sujana & Majumder, Subrata, 2023. "Subnational governments and COVID management," Economic Modelling, Elsevier, vol. 124(C).
    30. Paolo Finaldi Russo & Ludovica Galotto & Cristiana Rampazzi, 2022. "The Financial literacy of micro-entrepreneurs: evidence from Italy," Questioni di Economia e Finanza (Occasional Papers) 727, Bank of Italy, Economic Research and International Relations Area.
    31. Tea Petrin & Dragana Radicic, 2023. "Instrument policy mix and firm size: is there complementarity between R&D subsidies and R&D tax credits?," The Journal of Technology Transfer, Springer, vol. 48(1), pages 181-215, February.
    32. Bonfim, Diana & Custódio, Cláudia & Raposo, Clara, 2023. "Supporting small firms through recessions and recoveries," Journal of Financial Economics, Elsevier, vol. 147(3), pages 658-688.
    33. Kochaniak, Katarzyna & Ulman, Paweł & Zajkowski, Robert, 2023. "Effectiveness of COVID-19 state aid for microenterprises in Poland," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 483-497.
    34. James P. LeSage & R. Kelley Pace & Nina Lam & Richard Campanella & Xingjian Liu, 2011. "New Orleans business recovery in the aftermath of Hurricane Katrina," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(4), pages 1007-1027, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alessio Tomelleri & Anna Gloria Billé, 2023. "Do micro-enterprises ask for local support measures? Evidence after the COVID-19 pandemic," FBK-IRVAPP Working Papers 2023-04, Research Institute for the Evaluation of Public Policies (IRVAPP), Bruno Kessler Foundation.
    2. Kochaniak, Katarzyna & Ulman, Paweł & Zajkowski, Robert, 2023. "Effectiveness of COVID-19 state aid for microenterprises in Poland," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 483-497.
    3. Bera, Anil K. & Doğan, Osman & Taşpınar, Süleyman, 2018. "Simple tests for endogeneity of spatial weights matrices," Regional Science and Urban Economics, Elsevier, vol. 69(C), pages 130-142.
    4. Piras, Gianfranco & Sarrias, Mauricio, 2023. "One or two-step? Evaluating GMM efficiency for spatial binary probit models," Journal of choice modelling, Elsevier, vol. 48(C).
    5. Anna Gloria Billé & Samantha Leorato, 2017. "Quasi-ML estimation, Marginal Effects and Asymptotics for Spatial Autoregressive Nonlinear Models," BEMPS - Bozen Economics & Management Paper Series BEMPS44, Faculty of Economics and Management at the Free University of Bozen.
    6. Telegdy, Álmos, 2024. "Subsidized working capital loans and firm growth in times of crisis," Economics Letters, Elsevier, vol. 245(C).
    7. Nivala, Annika, 2024. "(No) Effects of Subsidizing the First Employee: Evidence of a Low Take-up Puzzle Among Firms," Working Papers 166, VATT Institute for Economic Research.
    8. Cutrini, Eleonora & Mendez, Carlos, 2023. "Convergence clubs and spatial structural change in the European Union," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 167-181.
    9. Olga Demidova, 2021. "Methods of spatial econometrics and evaluation of government programs effectiveness," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 64, pages 107-134.
    10. Grimm, Michael & Paffhausen, Anna Luisa, 2015. "Do interventions targeted at micro-entrepreneurs and small and medium-sized firms create jobs? A systematic review of the evidence for low and middle income countries," Labour Economics, Elsevier, vol. 32(C), pages 67-85.
    11. Shi, Wei & Lee, Lung-fei, 2018. "A spatial panel data model with time varying endogenous weights matrices and common factors," Regional Science and Urban Economics, Elsevier, vol. 72(C), pages 6-34.
    12. Ruiz-Martinez, I. & Martinetti, D. & Marraccini, E. & Debolini, M., 2022. "Modeling drivers of farming system trajectories in Mediterranean peri-urban regions: Two case studies in Avignon (France) and Pisa (Italy)," Agricultural Systems, Elsevier, vol. 202(C).
    13. Arouri, Hassan & Ben-Youssef, Adel & Quatraro, Francesco & Vivarelli, Marco, 2018. "The Determinants of Young Firms Growth in Tunisia," IZA Discussion Papers 11400, Institute of Labor Economics (IZA).
    14. Zhu, Shengda & Fu, Xiaowen & Bell, Michael G.H., 2021. "Container shipping line port choice patterns in East Asia the effects of port affiliation and spatial dependence," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    15. Cockx, Bart & Desiere, Sam, 2024. "Labour costs and the decision to hire the first employee," European Economic Review, Elsevier, vol. 170(C).
    16. Zhengyu Zhang, 2013. "A Pairwise Difference Estimator for Partially Linear Spatial Autoregressive Models," Spatial Economic Analysis, Taylor & Francis Journals, vol. 8(2), pages 176-194, June.
    17. Calkins, Lindsay N. & Ryan, Alexander J. & Zlatoper, Thomas J., 2023. "The Political Economy of Recreational Marijuana Laws in the U.S.: A Spatial Approach," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 53(01), April.
    18. Badi H. Baltagi & Peter H. Egger & Michaela Kesina, 2018. "Generalized spatial autocorrelation in a panel-probit model with an application to exporting in China," Empirical Economics, Springer, vol. 55(1), pages 193-211, August.
    19. Hazwan Haini & Pang Wei Loon & Lawal Olamilekan Abdulwahab & Wafid Sophian, 2024. "Did government support delay bankruptcy during the pandemic?," Economic Affairs, Wiley Blackwell, vol. 44(1), pages 17-30, February.
    20. Chatri, Abdellatif & Hadef, Khadija & Samoudi, Naima, 2021. "Micro-econometric evaluation of subsidized employment in morocco: the case of the "Idmaj" program," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 55, pages 1-17.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:149:y:2025:i:c:s0264999325000823. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.