Study on the effectiveness of COVID-Aid on firms

Metadati delle pubblicazioni The study examines the impact of COVID State aid measures (COVID aid) on firm performance for three Member States, namely Italy, Poland and Spain, for which national state aid registers are available. These data on aid recipients are merged with balance sheet data obtained from Bureau Van Dijk to create a panel of firms covering the period 2017-2021. The performance indicators analysed are turnover and probability of default. To assess the causal effect of the aid, a difference-in-differences approach is used, comparing firms that received only COVID aid with firms that did not receive any State aid during the period under analysis, thus excluding beneficiaries of other types of aid. Propensity score matching weighting (PSM) is used to account for pre-existing differences in financial characteristics between beneficiaries and non-beneficiaries that are likely to determine the probability of receiving aid. The basic model is estimated across different categories of (pre-crisis) firm size, economic sector and type of financial instrument received to assess the heterogeneity of impacts. The results show that, on average, COVID state aid led to a statistically significant increase in firms' turnover in 2021, suggesting that the aid helped firms to remain active despite the slack caused by the COVID crisis. However, aid recipients also experienced a slight increase in their probability of default in the same year. The impact of COVID aid also appears to be heterogeneous across countries, sectors, and firm size and according to the instrument adopted.