Using a set of monthly firm-level data compiled by various government agencies (e.g., Enterprise Singapore (ESG), Ministry of Manpower (MOM), Central Provident Fund Board (CPFB)), this study examines the impact of ESG’s financing schemes (viz., Temporary Bridging Loan (TBL) Programme and Enhanced Enterprise Financing Scheme – SME Working Capital Loan (EWCL)) during the COVID-19 pandemic.
In the past, such impact analyses would have been carried out with a significant time lag due to the use of annual data on firm-level outcomes that are compiled with a lag. Given the unprecedented scale of the economic fallout from the COVID-19 pandemic and the fast-evolving health situation, a more timely analysis of the impact of the government schemes put in place to help firms and workers tide over the crisis was needed in order to calibrate the government’s responses to the pandemic more effectively. As such, this study tapped on high-frequency (monthly) firm-level outcome indicators to provide an assessment of the impact of the financing schemes during the crisis.
In line with the policy intent, the results of the study showed that a TBL loan of average quantum reduced the probability of firm financial distress (i.e., probability of a firm missing its payment obligations) by 0.05 percentage-point (pp) and had a positive impact on firms’ total employment of 0.26 per cent on average. The alleviation of financial distress was seen across firms of all sizes, while the impact on total employment was driven by smaller firms (i.e., firms with no more than 50 employees).
Given the high-frequency nature of the data used for the study, the estimated impact of the financing schemes should be seen as the short-term impact. Its purpose is to provide a prompt sensing of the schemes’ effectiveness during the pandemic. A more comprehensive study to analyse the longer-term benefits and costs of the schemes should be conducted once annual data on firm-level outcomes (e.g., financial information, value-added) are available.
The views expressed in this paper are solely those of the author and do not necessarily reflect those of the Ministry of Trade and Industry (MTI) or other government agencies.
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