COVID-19 and SMEs: A 2021 "Time Bomb"?

Pierre-Olivier Gourinchas, Sebnem Kalemli-Ozcan, Veronika Penciakova and Nick Sander

No 28418, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper assesses the prospects of a 2021 time bomb in SME failures triggered by the generous support policies enacted during the 2020 COVID-19 crisis. Policies implemented in 2020, on their own, do not create a 2021 “time-bomb” for SMEs. Rather, business failures and policy costs remain modest. By contrast, credit contraction poses significant risk. Such a contraction would disproportionately impact firms that could survive COVID-19 in 2020 without any fiscal support. Even in that scenario, most business failures would not arise from excessively generous 2020 policies, but rather from the contraction of credit to the corporate sector.

JEL-codes: D2 E65 G33 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-ent and nep-sbm
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Citations: View citations in EconPapers (2)

Published as Gourinchas, Pierre-Olivier, Şebnem Kalemli-Özcan, Veronika Penciakova, and Nick Sander. 2021. "COVID-19 and Small- and Medium-Sized Enterprises: A 2021 "Time Bomb"?" AEA Papers and Proceedings, 111: 282-86.

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Working Paper: COVID-19 and SMEs: A 2021 "Time Bomb"? (2021)
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