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COVID-19 financial support to small businesses in Switzerland: evaluation and outlook

Author

Listed:
  • Marius Brülhart

    (University of Lausanne)

  • Rafael Lalive

    (University of Lausanne)

  • Tobias Lehmann

    (University of Lausanne)

  • Michael Siegenthaler

    (ETH Zurich)

Abstract

We analyse small businesses’ recourse to public support measures during the COVID-19 crisis using a survey of 1011 self-employed workers and small business owners in Switzerland. We find that “objective” measures of lockdown affectedness and economic structure explain fairly well how businesses availed of support measures to cover labour costs. Recourse to government-backed corona loans, however, appears to be driven to a larger extent by behavioural idiosyncrasies across firms. Specifically, previously indebted businesses took out corona loans more readily than those who had been debt-free before the pandemic. Since uptake is not well in line with firm fundamentals, we propose making loan repayments contingent on future profits. This will more effectively target and sustain businesses that are in trouble today but would be viable in the absence COVID-19.

Suggested Citation

  • Marius Brülhart & Rafael Lalive & Tobias Lehmann & Michael Siegenthaler, 2020. "COVID-19 financial support to small businesses in Switzerland: evaluation and outlook," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 156(1), pages 1-13, December.
    • Handle: RePEc:spr:sjecst:v:156:y:2020:i:1:d:10.1186_s41937-020-00060-y
    DOI: 10.1186/s41937-020-00060-y
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    1. Jonas Kolsrud & Camille Landais & Peter Nilsson & Johannes Spinnewijn, 2018. "The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden," American Economic Review, American Economic Association, vol. 108(4-5), pages 985-1033, April.
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    5. Benedikt Zoller-Rydzek & Florian Keller, 0. "COVID-19: guaranteed Loans and Zombie Firms," CESifo Economic Studies, CESifo Group, vol. 66(4), pages 322-364.
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    Cited by:

    1. Sylvia Kaufmann, 2022. "Covid-19 outbreak and beyond: A retrospect on the information content of registered short-time workers for GDP now- and forecasting," Working Papers 22.02, Swiss National Bank, Study Center Gerzensee.
    2. Ambika Zutshi & John Mendy & Gagan Deep Sharma & Asha Thomas & Tapan Sarker, 2021. "From Challenges to Creativity: Enhancing SMEs’ Resilience in the Context of COVID-19," Sustainability, MDPI, vol. 13(12), pages 1-16, June.
    3. Lucia Svabova & Katarina Kramarova & Dominika Chabadova, 2022. "Impact of the COVID-19 Pandemic on the Business Environment in Slovakia," Economies, MDPI, vol. 10(10), pages 1-22, October.
    4. Sylvia Kaufmann, 2023. "Covid-19 outbreak and beyond: a retrospect on the information content of short-time workers for GDP now- and forecasting," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 159(1), pages 1-10, December.
    5. 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.
    6. Benedikt Janzen & Doina Maria Radulescu, 2021. "Effects of Covid-19 Related Government Response Stringency and Support Policies: Evidence from European Firms," CESifo Working Paper Series 9116, CESifo.
    7. Florian Eckert & Heiner Mikosch, 2022. "Firm bankruptcies and start-up activity in Switzerland during the COVID-19 crisis," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-25, December.
    8. Monika Bütler, 2022. "Economics and economists during the COVID-19 pandemic: a personal view," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-15, December.
    9. 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.

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