Can the firm-level strategies and government intervention policies mitigate the harms caused by the Covid-19 pandemic? Firm-level evidence from Italy

Abstract

The purpose of this study is to identify the effects of Covid-19 on business in Italy, factors accelerating the impacts, and business strategies and government policies to combat the business impacts of the pandemic. The study uses combined data sets of the World Bank enterprise survey and the follow-up Covid-19 survey in Italy. Based on the survey, the study classifies the business impacts of Covid-19 into four types such as temporary closure, demand shock, supply shock, and fall of sales. The study applies PSM model with nearest neighbour matching method to analyze the data.The results of the study suggest that liquidity crisis, fall in credit sales, and credit purchases are the main reasons for Covid-19’s impacts on Italian business. Business strategies during the pandemic such as online activity, home delivery, and remote work significantly reduce the impacts of the pandemic. Alternative financing sources and government incentives do not help firms to combat Covid-19’s impacts. The results also suggest that the business impacts of Covid-19 and its contributing and combating factors significantly vary across the firm’s sectors and sizes.

Keywords: Covid-19; Business-LevelStrategies; Government Policy; Italy

Notes on Contributor
Associate Professor, Department of Banking and Insurance, University of Dhaka, Dhaka, Bangladesh, Email: nhp@du.ac.bd [Corresponding author] Associate Professor, Department of International Business, University of Dhaka, Dhaka, Bangladesh, Email: mmislam@du.ac.bd