Abstract
The 2019 novel coronavirus disease (COVID-19) pandemic has significantly impacted several aspects of the society and the economy. A problem that needs prompt attention in this situation is the increasing difficulties faced by small- and medium-sized enterprises (SMEs) in raising capital, which has aroused great concern from multiple stakeholders such as public administrations and regulators. As the major supply of capital, financial service providers (FSPs) play a critical role in financing SMEs. However, how FSPs deal with SME financing during shocks has not yet been fully researched. Accordingly, in this study, a theoretical framework based on expectancy theory is proposed to explore the expected strategic adjustments of FSPs in financing SMEs. Specifically, this study investigates 272 FSPs in China on their expectancy and attitude on financing to SMEs during the COVID-19 pandemic. Furthermore, this study has divided FSPs into three categories: commercial banks, non-bank financial institutions, and credit-enhanced FSPs. Differences among these categories are compared and analyzed.
Highlights
The 2019 novel coronavirus disease (COVID-19) pandemic has caused businesses to stagnate and disrupted supply chains, forcing numerous enterprises, especially small and medium-sized enterprises (SMEs), and individuals facing great pressure in terms of capital shortage (Guo et al 2020)
According to the review of expectancy theory and the literature on financial service providers (FSPs)’ financing SMEs, this study considers the effects of firm-level factors such as the relevant resources and capabilities, interfirm-level factors such as collaboration with peer FSPs’ focal firm, and institution, or environmentlevel factors such as collaboration with public administrations and regulators on the “financing expectancy,” and the activity-level factors which reflect FSPs’ preferences for the outcome obtained by providing financing to SMEs on the “financing valence.”
This study proposes a theoretical framework based on expectancy theory to explore how FSPs support SMEs in the context of the COVID-19 pandemic
Summary
The 2019 novel coronavirus disease (COVID-19) pandemic has caused businesses to stagnate and disrupted supply chains, forcing numerous enterprises, especially small and medium-sized enterprises (SMEs), and individuals facing great pressure in terms of capital shortage (Guo et al 2020). Multiple stakeholders, such as public administrations and regulators, have taken different measures to support SMEs financially. Some studies have shown that the cash flow pressure of SMEs has not been significantly relieved even after the implementations of self-help measures and external supports (Bartik et al 2020). It is necessary to turn the institutional and research focus to another vital stakeholder— financial service providers (FSPs)
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