Small and Medium Enterprises in the Pandemic: Impact, Responses and the Role of Development Finance

Ikmal Adian, Djeneba Doumbia, Neil Gregory, Alexandros Ragoussis, Aarti Reddy and Jonathan David Timmis

No 9414, Policy Research Working Paper Series from The World Bank

Abstract: This study highlights how COVID-19 has affected small and medium enterprises, drawing on newlyreleased World Bank Enterprise Surveys in 13 countries. The study shows that firms of all sizes are severely affected inmultiple dimensions; however, firm size matters for the intensity of the different channels of transmission andfirms' responses. Small and medium enterprise sales shrink by more and their cash drains faster than large firmsin the same sector and country. Among them, faster growing firms experience the demand shock somewhat less severely,but they are more exposed to international trade disruption, supply, and finance shocks. Yet, a range of firm responsesto the downturn seem to be out of reach. Fewer small and medium-size enterprises, for example, start remote work,leaving their workers exposed to health risks. To make it through the pandemic, the majority of smaller firms do notturn to banks for loans; they need grants. Although development finance is not enough to fill the financing gap,development finance institutions are relevant -- in investment mobilization, demonstration, and know-how -- aseconomies move toward recovery and rebuilding. Delivering these requires rapid efforts to build partnerships andgather information in places where development finance has been limited in the past.

Keywords: Financial Sector Policy; Employment and Unemployment; International Trade and Trade Rules; Health Care Services Industry (search for similar items in EconPapers)
Date: 2020-09-24
New Economics Papers: this item is included in nep-ent and nep-sbm
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Citations: View citations in EconPapers (14)

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