Publication: Impact of public guarantees on optimal debt levels following the COVID-19 pandemic: efficiency in their allocation
Authors
Baixauli Soler, J. Samuel ; Lozano Reina, Gabriel ; Álvarez Díez, Susana ; Rodríguez-Linares Rey, Diego
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Facultades, Departamentos, Servicios y Escuelas::Departamentos de la UMU::Organización de Empresas y Finanzas ; Facultades, Departamentos, Servicios y Escuelas::Departamentos de la UMU::Métodos Cuantitativos para la Economía y la Empresa
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Publisher
Taylor and Francis Group
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DOI
https://doi.org/10.1080/02102412.2023.2177460
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info:eu-repo/semantics/article
Description
© 2023, The authors. This document is made available under the CC-BY-NC 4.0 license http://creativecommons.org/licenses/by-nc /4.0/
This document is the accepted version of a published work that appeared in final form in Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad
To access the final work, see DOI: https://doi.org/10.1080/02102412.2023.2177460
Abstract
The COVID-19 pandemic triggered a sudden drop in companies’ sales and turnover, which resulted in serious liquidity and solvency problems. In an effort to cushion these unfavourable effects, a credit guarantee plan was launched in 2020 by the Spanish Government to mitigate the effects of COVID-19 by injecting firms with liquidity. This paper seeks to analyse the impact of this public policy on SMEs’ optimal debt levels and to examine whether the allocation of this public funding has been efficiently targeted at those SMEs suffering temporary distress as a result of the pandemic. Based on a sample of 3,305 Spanish SMEs, our results show that the government’s interventionist policy swelled excess debt levels – mainly due to the increase in excess long-term debt – and deviated them from the optimum. Moreover, although these public guarantees should mostly have been aimed at SMEs experiencing a temporary decline due to COVID-19, we find that these SMEs were the least likely to receive liquidity injections.
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Citation
Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad, 2023, Vol. 53(2), pp. 176–202
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2024-08-17
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