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Assessing the Effectiveness of COVID-19 Support Policies on Firm Performance: Evidence from Japanese SMEs

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  • Manabu Furuta

    (Graduate School of Economics, Kobe University)

Abstract

This study evaluates the effectiveness of government financial support for small and medium-sized enterprises (SMEs) in Japan during the COVID-19 pandemic. The Japanese government implemented various programs to support SMEs facing financial distress, leading to a notable decline in bankruptcies. We find that SMEs with strong ties to main banks and exporters were more likely to receive support, while subsidiaries or affiliates of large corporations were less likely to benefit. Although prior studies suggest that such policies may encourage "zombie" firms, our analysis shows that in the manufacturing sector, financial assistance fostered investment. JEL Classification: D22; D25; L52

Suggested Citation

  • Manabu Furuta, 2025. "Assessing the Effectiveness of COVID-19 Support Policies on Firm Performance: Evidence from Japanese SMEs," Discussion Papers 2518, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:2518
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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2025/2518.pdf
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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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