Firms’ participation in the Swiss COVID-19 loan programme

Firms’ participation in the Swiss COVID-19 loan programme

Blog Article

Abstract This paper analyses the determinants of firm participation in the Swiss COVID-19 loan programme, which aims to bridge firms’ liquidity shortfalls that have resulted from the pandemic.State-guaranteed COVID-19 loans are widely used by Swiss firms, with 20% of all firms participating, resulting in a sizeable programme of 2.4% of GDP.
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We use a comprehensive dataset to study the determinants of firm participation.Our results can be summarised as follows.First, participation was largely driven by the exposure of a firm to lockdown restrictions and to the intensity of the virus in the specific region.

Second, we show that firms associated with lower liquidity ratios had a significantly higher probability of participating in the programme.Third, we find no clear evidence that firm indebtedness affected participation in the programme and no evidence that pre-existing potential “zombie firms” participated more strongly in the loan programme.
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.Fourth, we show that the programme reached younger and smaller firms, which could be financially more vulnerable as they are less likely to obtain outside finance during a crisis.

Overall, we conclude that given its objective, the programme appears to be successful