Policies to Support Businesses through the COVID-19 Shock: A Firm-Level Perspective

Jul 19, 2026

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A global firm-level assessment evaluates policies implemented to support businesses during the COVID-19 pandemic, using a dataset covering 120,000+ firms across 60 countries. The analysis addresses policy reach, alignment with firm needs, targeting, and effectiveness, with emphasis on developing economies. Findings show limited reach for vulnerable firms and countries, mismatches between reported priorities and received support, and evidence of both mistargeting and impacts on liquidity constraints and layoffs. The study guides tailoring of COVID-19 business support packages and highlights directions for future data and research.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages26

Reading Time1 h 6 min

Introduction

Data and scope

Research approach and analysis

Stylized findings and evidence

Pub lic Disclosure Authorized Pub lic Disclosure Authorized | Policies to Support Businesses through the COVID-19 Shock: A Firm Level<br>Perspective | | --- | | Xavier Cirera, Marcio Cruz, Elwyn Davies, Arti Grover, Leonardo Iacovone, Jose Ernesto Lopez Cordova, Denis Medvedev, Franklin Okechukwu Maduko, Gaurav Nayyar, Santiago Reyes Ortega, and Jesica Torres | Relying on a novel dataset covering more than 120,000 firms in 60 countries, this paper contributes to the debate about policies to support businesses through the COVID-19 pandemic. While governments around the world have implemented a wide range of policy sup port measures, evidence on the reach of these policies, the alignment of measures with firm needs, and their targeting and effectiveness remains scarce. This paper provides the most comprehensive assessment to date of these issues, focusing primarily on developing economies. It shows that policy reach has been limited, especially for more vulnerable firms and coun tries, and identifies mismatches between policies provided and policies most sought. It also provides some indicative evidence regarding mistargeting of policies and their effectiveness in addressing liquidity constraints and preventing layoffs. This assessment provides some early guidance to policymakers on tailoring their COVID-19 business support packages and points to new directions in data and research efforts needed to guide policy responses to the current pandemic and future crises. JEL Codes: D22, L20, L25, O10 Keywords: COVID-19, firms, policies, uncertainty. Introduction The economic impact of the COVID-19 pandemic has been severe and persistent. In 2020, the global economy is expected to experience its worst recession since the great depression of the 1930s with the highest share of countries experiencing contractions in per capita GDP since 1870 (WBG 2020) .1 Estimates by The World Bank Research Observer © The Author(s) 2021 . Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. For permissions, please e-mail: [journals.permissions@oup.com](journals.permissions@oup.com) [doi: 10.1093/wbro/lkab001 36:41](doi: 10.1093/wbro/lkab001 36:41)–[66](66) Downloaded from [https://academic.oup.com/wbro/article/36/1/41/6144699 by Joint Bank/Fund Library user on 06 September 2023](https://academic.oup.com/wbro/article/36/1/41/6144699 by Joint Bank/Fund Library user on 06 September 2023) Apedo-Amah et al. (2020) show that firm sales declined by more than 70 percent around the peak of the crisis (as measured by the steepest drop in Google Mobility) and have remained more than 40 percent below last year’s levels even several months later. Two-thirds of firms have either fired employees, reduced worker hours or wages, or asked workers to take leave. More than half of micro and small businesses (those with fewer than 20 employees) are in arrears or expect to fall in arrears in the next six months. And while there is welcome news of vaccines and new treatments for COVID-19, these are unlikely to be available everywhere at once, meaning that the economic pain is likely to persist for some time. In response to the crisis, governments around the world have relied on a wide range of policy measures to support firms and households. While these responses have been uneven across countries, they are unprecedented in their magnitude. Fiscal stimulus in high-income economies has reached 10 percent of GDP or more, with around 40 percent going to firm support. In developing countries, faced with more limited fiscal space, governments have allocated between 1 percent and 3 percent of GDP to this purpose, with about a quarter of this amount dedicated to supporting businesses. Irrespective of the amount of the resources invested, data on whether these are reaching the intended beneficiaries, addressing their needs, and helping firms adjust to COVID-19 are des

FAQs

What dataset and time period does the paper use to assess business support policies?

The paper uses a dataset covering 120,000+ firms in 60 countries during April–September 2020 to examine implemented policies and firm outcomes.

How does the paper evaluate whether policies reach the intended beneficiaries?

It characterizes which firms received policy support, contrasts implemented policies with those firms consider most important, and studies reasons for not accessing support.

What does the paper find about policy effectiveness and mistargeting?

Policy reach is limited for vulnerable firms and countries, with evidence of mistargeting. Credit and cash transfers appear to help with liquidity constraints, while wage subsidies are associated with a lower probability of layoffs.

Jul 19, 2026

Upload by Eliana