Impact of COVID-19 Stimulus Packages on Small and Medium Enterprises (SMEs)

A Chilean bank randomly offers credits to SMEs. Credits are supported by the stimulus package designed by the Chilean Government.

2021-03-21

2021-04-30

We hope to understand what might be preventing firms from taking up these services and to quantify the impact of pandemic-specific protections and relief on firm profits, survival, and employment. Key primary outcomes are the following:

Take Up Rate, measured as the proportion of firms who take up the offered loan

Profits, measured in US dollars.

Sales, measured in US dollars.

Survival Rate, measured as the proportion of firms that continue with their activities

Employment, measured as the number of workers per firm.

We will be working with potential and actual SME clients of a Chilean bank. Firms are divided in the following three eligible groups, with roughly 10,000 firms in total:
i) Firms that were contacted in the last credit campaign to face the current crisis, and that requested credit but may need more credit now;
ii) Firms that were contacted in the last credit campaign to face the current crisis, and that did not requested credit but but may need credit now;
iii) Firms that requested a loan but were rejected / not pre-selected by the bank in the last credit campaign. In particular, these are firms that were at the credit rejection limit, that is, firms that would have been approved for the loan they requested if the scoring criteria for accepting a loan had been marginally more flexible.

The experiment works as follows:

1) 50% of the firms will be randomly assigned to the treatment (encouraged) group and 50% of them to the control (non-encouraged) group.
2) Treatment-group firms will be informed by text messages, phone, and/or emails regarding the existence of credit opportunities offered by the bank within the framework of the relief program designed by Chilean government. The bank will offer them as many administrative facilities as possible to convince them to actually apply for credit and complete the loan application. Control firms will not be either informed not helped to apply for credit.
3) Treatment (encouraged) firms that apply for credit will be offered a loan. Control-group (non-encouraged) firms can apply to credits by their own means, and the bank will not a priori deny them access to credit.

Randomization is implemented by researchers in their own computers. The results of randomization is then sent to bank administrators in separate lists: one list of treatment firms, another list of control firms. Along with this, we send a monitoring data base that bank administrators have to continuously update in order to monitor the take up rate across experimental groups.

Randomization is at the firm level. We stratify randomization by firm type (3 categories), credit scoring (3 categories), and sales (3 categories)

Yes

Randomization unit is the firm. This is no a clustered randomized trial

10,072 firms

5069 treatment firms;
5003 control firms