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

Author

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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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    References listed on IDEAS

    as
    1. Honda, Tomohito & Hosono, Kaoru & Miyakawa, Daisuke & Ono, Arito & Uesugi, Iichiro, 2023. "Determinants and effects of the use of COVID-19 business support programs in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 67(C).
    2. Kawaguchi, Kohei & Kodama, Naomi & Tanaka, Mari, 2021. "Small business under the COVID-19 crisis: Expected short- and medium-run effects of anti-contagion and economic policies," Journal of the Japanese and International Economies, Elsevier, vol. 61(C).
    3. Hoshi, Takeo & Kawaguchi, Daiji & Ueda, Kenichi, 2023. "Zombies, again? The COVID-19 business support programs in Japan," Journal of Banking & Finance, Elsevier, vol. 147(C).
    4. Morikawa, Masayuki, 2021. "Productivity of firms using relief policies during the COVID-19 crisis," Economics Letters, Elsevier, vol. 203(C).
    5. repec:osf:socarx:hd5f2_v1 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    Keywords

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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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