The effects of small-firm loan guarantees in the UK: insights for the COVID-19 pandemic crisis

Gonzalez-Uribe, Juanita ORCID: 0000-0002-1945-7372 and Wang, Su (2020) The effects of small-firm loan guarantees in the UK: insights for the COVID-19 pandemic crisis. Financial Markets Group Discussion Papers (795). Financial Markets Group, The London School of Economics and Political Science, London, UK.

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Abstract

Loan guarantees are popular policy responses during the COVID-19 crisis. Despite their prevalence, evidence of their effectiveness is sparse. We estimate the impacts of UK guarantees during the Great Recession, by exploiting firm-size eligibility restrictions. Guarantees increased four-year performance, labour-productivity, and employment growth, but not investment. Results are driven by firms with high-training-costs employees. They are consistent with the guarantees enabling a small number of financially constrained firms to retain workers that helped rebuild the businesses post-crisis. The results suggest that COVID-19 responses based on guarantees alone can be regressive, because poorer workers are more likely to have low-training-costs jobs.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://www.fmg.ac.uk/
Additional Information:	© 2020 The Authors
Divisions:	Finance
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification:	D - Microeconomics > D0 - General > D00 - General D - Microeconomics > D2 - Production and Organizations > D20 - General G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H32 - Firm H - Public Economics > H8 - Miscellaneous Issues > H81 - Governmental Loans, Loan Guarantees, and Credits
Date Deposited:	25 May 2023 08:54
Last Modified:	11 Dec 2024 19:45
URI:	http://eprints.lse.ac.uk/id/eprint/118916

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