Impact of Public Guarantees on Optimal Debt Levels Following the Covid-19 Pandemic : Efficiency in Their Allocation
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 unfavorable 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 analyze 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
Year of publication: |
2023
|
---|---|
Authors: | Baixauli-Soler, J. Samuel ; Lozano-Reina, Gabriel ; Alvarez, Susana ; Rodríguez-Linares Rey, Diego |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (37 p) |
---|---|
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | In: Spanish Journal of Finance and Accounting Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 2, 2023 erstellt |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014257837
Saved in favorites
Similar items by person
-
Baixauli-Soler, J. Samuel, (2024)
-
Say on pay effectiveness, corporate governance mechanisms, and CEO compensation alignment
Sánchez Marín, Gregorio, (2017)
-
Managerial discretion, say on pay, and CEO compensation
Baixauli-Soler, J. Samuel, (2020)
- More ...