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Government Support and Firm Performance During COVID-19

Author

Listed:
  • Miriam Bruhn

    (World Bank)

  • Asli Demirguc-Kunt

    (Center for Global Development)

  • Dorothe Singer

    (World Bank)

Abstract

This paper assesses the medium-run effects of government support to firms during the COVID-19 crisis and whether the effectiveness of this support varied with its timing. Using data from three rounds of the World Bank’s Enterprise Surveys COVID-19 Follow-up Surveys carried out between May 2020 and August 2022, it relates government support in Round 1 and 2 with firm performance in Round 3. Our results add to the existing literature on government support during the COVID-19 shock and previous crises, which has provided little evidence on how the effect of this support varies with its timing. Controlling for a host of background characteristics, firms that received support in Round 1 performed better in terms of Round 3 sales, but only if they did not have continued support. Firms that also received support in Round 2 had similar Round 3 sales to those who received no support. Firms that received government support only in Round 2 experienced no boost in Round 3 performance. The findings suggest that government support should be provided promptly, but it should also be phased out quickly.

Suggested Citation

  • Miriam Bruhn & Asli Demirguc-Kunt & Dorothe Singer, 2026. "Government Support and Firm Performance During COVID-19," Working Papers 742, Center for Global Development.
    • Handle: RePEc:cgd:wpaper:742
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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