Work

Defaults on government guaranteed loans by potential high growth firms: Evidence from the COVID-19 period

Year: 2024

Type: article

Abstract: Equity finance is used to fund innovative and growth-oriented businesses because of its resilience during economic downturns and investors' willingness to undertake higher risks compared to other financing. During the pandemic, 6,500 equity-funded firms obtained government-guaranteed loans from a mix of traditional banks and new lenders. Our analysis of the determinants of loan default revealed that new lenders experienced a significantly higher default rate compared to the main banking sector. Additionally, firms funded by digital platforms had a higher loan default rate than those backed by other equity providers. We explore the factors influencing defaults and the variations by lender and investor type.

Source: Economics Letters

DOI: 10.1016/j.econlet.2024.111941

Authors: Marek Kacer, Nicholas Wilson, Sana Zouari

Institution: University of Leeds

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $2,980