Environmental performance and firm financing during COVID-19 outbreaks: evidence from SMEs

Nirosha Hewa Wellalage, Vijay Kumar, Ahmed Imran Hunjra*, Mamdouh Abdulaziz Saleh Al-Faryan

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    Abstract

    The COVID-19 pandemic has resulted in substantial constraints for small and medium enterprises (SMEs) worldwide. The techniques in which SMEs handle recent crises and the degree to which environmental performance is advantageous when the marketplace experiences an adverse shock is fairly untouched in the literature. To assess this probability, we examine, using data from 6,597 SMEs in 13 developing countries, the effect of firm environmental efficiency on firm financing during the COVID-19 outbreak. We consider three aspects of external financing – bank, non-bank and trade credit – and suggest that it pays for firms to show devotion to environmental obligations in a global pandemic. Our research implies that the trust between a firm and its stakeholders, if it is based on environmental performance, pays off during periods of shock and adversity.

    Original languageEnglish
    Article number102568
    JournalFinance Research Letters
    DOIs
    Publication statusAccepted for publication - 15 Nov 2021

    Keywords

    • COVID-19
    • environmental performance
    • environmental regulations
    • firm financing
    • small and medium enterprises (SMEs)

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