Deferring cash commitments to mitigate COVID-19 impact on the service sector: a case study of a transition economy

Ömer Doruk

Journal of Money and Business, 2023, vol. 3, issue 2, 197-211

Abstract: Purpose - This study aims to use a comparative analysis to examine the channel of deferring cash commitments, which can be seen as a strategic solution to mitigate the impact of COVID-19 on Moldova's service sector. Design/methodology/approach - This paper uses the Oaxaca–Blinder decomposition analysis. The World Bank's post-COVID-19 survey is used. The methodology takes into account heterogeneity among firms. Findings - The results of the Oaxaca–Blinder decomposition analysis show that service firms use deferred cash commitments more than industrial firms, corporate governance and their pandemic-related strategies are also effective in the post-COVID Moldovan economy. The results are robust to different modeling alternatives. Originality/value - COVID-19 can be considered a key source of uncertainty for firms, especially those operating in economies where financial frictions occasionally occur in a transition economy. Therefore, this study can shed new light on the impact of COVID-19 on financial strategies in a transition economy.

Keywords: Oaxaca-Blinder decomposition; COVID-19; Moldavian economy; Services sector; Cash commitments; Comparative analysis; G15; G18; Q54 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmbpps:jmb-05-2023-0029

DOI: 10.1108/JMB-05-2023-0029

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