Business Support during the Financial Crisis and the COVID-19 Pandemic – Analysis of International and Latvian Experience

Description

The objective of our research is to compare business support during the financial crisis and COVID-19 pandemics.. In our research, we use reports issued by international institutions, recent scientific literature, case study analysis and survey data. Research methods include monographic and secondary data analysis methods.. During financial crisis, countries used very different approaches to stabilize the situation. In Latvia, austerity measures to deal with the effects of the financial crisis hit businesses hard, creating the belief that government cares little about sustainability of entrepreneurship. The COVID-19 pandemic has come up with large-scale government support for business sector – loans, equity injections, subsidies, etc. Thus, liquidity problems and probability of default have diminished dramatically. Meanwhile, these emergency measures created serious economic distortions which eventually lead to excessive inflation.. The crises in 2008 and 2020 had different background and thus – different reaction from public authorities. After the financial crises many companies went bankrupt, the rest learned hard lessons of financial discipline. The lessons learned from the pandemic crisis are related to restoring strength, competitiveness, becoming more innovative and flexible. It is important to ensure very well-considered and transparent economic support programmes with a longer-term view to avoid future market distortions. COVID-19 pandemic caused significant economic shock with negative impact on  entrepreneurship. Prolonged business shutdowns, demand decrease, and value chain disruptions created considerable financial pressures on SMEs, threatening the operation of viable enterprises. Lending conditions were softened: low interest rates, reduced collateral requirements, various credit guarantee schemes and direct loans from state institutions. Complementary measures such as payment deferrals and debt moratoria provided relief for SME liquidity pressure. Alternative sources of finance (leasing and factoring) significantly declined. Venture capital and online alternative financing sector were quite resilient. To support recovery, the focus was on innovation, digitalization and environmental protection.

Period	29 Mar 2023
Event title	RSU Research week 2023: PLACES
Event type	Conference
Conference number	3
Organiser	Rīga Stradiņš University
Location	Rīga, LatviaShow on map
Degree of Recognition	International