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Loan Demand During The Covid-19 Pandemic

Author

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  • ZANA BEQIRI LUMA

    (Mother Teresa University, Skopje, North Macedonia)

Abstract

We analyze the effect of the COVID-19 outbreak on the demand for new loans across a nationally representative sample of over 10,000 firms in 45 countries. Loan demand decreases in response to the COVID-19 outbreak; however, this effect is heterogeneous across firms and countries. Small firms increase the demand for new loans whereas firms in economically more developed countries with better institutions make less loan applications following the start of the pandemic. Small firms face higher rejection rates resulting in less reliance on bank loans as a source of financing cash flow shortages. The implications of these findings together with future research directions are discussed.

Suggested Citation

  • Zana Beqiri Luma, 2023. "Loan Demand During The Covid-19 Pandemic," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 28(02), pages 1-30, June.
    • Handle: RePEc:wsi:jdexxx:v:28:y:2023:i:02:n:s1084946723500127
    DOI: 10.1142/S1084946723500127
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    More about this item

    Keywords

    COVID-19 crisis; loan demand; SMEs; discouraged borrowers; sources of finance;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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