Cargando…

Supporting SMEs during COVID-19: The case for targeted equity injections()

We analyze the potential role of equity injections in addressing solvency risks among small and medium-sized enterprises (SMEs) after the COVID-19 crisis. Building on firm-level balance sheet projections for a sample of European economies, we simulate selected policy interventions and find that equi...

Descripción completa

Detalles Bibliográficos
Autores principales: Díez, Federico J., Duval, Romain, Maggi, Chiara
Formato: Online Artículo Texto
Lenguaje:English
Publicado: International Monetary fund. Published by Elsevier B.V. 2022
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9316713/
https://www.ncbi.nlm.nih.gov/pubmed/35909983
http://dx.doi.org/10.1016/j.econlet.2022.110717
_version_ 1784754882725543936
author Díez, Federico J.
Duval, Romain
Maggi, Chiara
author_facet Díez, Federico J.
Duval, Romain
Maggi, Chiara
author_sort Díez, Federico J.
collection PubMed
description We analyze the potential role of equity injections in addressing solvency risks among small and medium-sized enterprises (SMEs) after the COVID-19 crisis. Building on firm-level balance sheet projections for a sample of European economies, we simulate selected policy interventions and find that equity injections are quite effective at dampening the rise in insolvencies. Cost effectiveness requires careful targeting, however; under an illustrative scenario, leaving aside any costs arising from imperfect information and implementation, the cost of a program targeting only those SMEs worth saving is just a tenth of the cost of an untargeted approach directed to all insolvent firms. Overall, our paper provides a case for governments to rely more on targeted equity injections in responding to major shocks that trigger mass solvency risks.
format Online
Article
Text
id pubmed-9316713
institution National Center for Biotechnology Information
language English
publishDate 2022
publisher International Monetary fund. Published by Elsevier B.V.
record_format MEDLINE/PubMed
spelling pubmed-93167132022-07-26 Supporting SMEs during COVID-19: The case for targeted equity injections() Díez, Federico J. Duval, Romain Maggi, Chiara Econ Lett Article We analyze the potential role of equity injections in addressing solvency risks among small and medium-sized enterprises (SMEs) after the COVID-19 crisis. Building on firm-level balance sheet projections for a sample of European economies, we simulate selected policy interventions and find that equity injections are quite effective at dampening the rise in insolvencies. Cost effectiveness requires careful targeting, however; under an illustrative scenario, leaving aside any costs arising from imperfect information and implementation, the cost of a program targeting only those SMEs worth saving is just a tenth of the cost of an untargeted approach directed to all insolvent firms. Overall, our paper provides a case for governments to rely more on targeted equity injections in responding to major shocks that trigger mass solvency risks. International Monetary fund. Published by Elsevier B.V. 2022-10 2022-07-26 /pmc/articles/PMC9316713/ /pubmed/35909983 http://dx.doi.org/10.1016/j.econlet.2022.110717 Text en © 2022 International Monetary fund Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active.
spellingShingle Article
Díez, Federico J.
Duval, Romain
Maggi, Chiara
Supporting SMEs during COVID-19: The case for targeted equity injections()
title Supporting SMEs during COVID-19: The case for targeted equity injections()
title_full Supporting SMEs during COVID-19: The case for targeted equity injections()
title_fullStr Supporting SMEs during COVID-19: The case for targeted equity injections()
title_full_unstemmed Supporting SMEs during COVID-19: The case for targeted equity injections()
title_short Supporting SMEs during COVID-19: The case for targeted equity injections()
title_sort supporting smes during covid-19: the case for targeted equity injections()
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9316713/
https://www.ncbi.nlm.nih.gov/pubmed/35909983
http://dx.doi.org/10.1016/j.econlet.2022.110717
work_keys_str_mv AT diezfedericoj supportingsmesduringcovid19thecasefortargetedequityinjections
AT duvalromain supportingsmesduringcovid19thecasefortargetedequityinjections
AT maggichiara supportingsmesduringcovid19thecasefortargetedequityinjections