Hostname: page-component-5b777bbd6c-5mwv9 Total loading time: 0 Render date: 2025-06-18T14:16:02.229Z Has data issue: false hasContentIssue false
  • English
  • Français

Firm Resiliency: The Role of Spillovers

Published online by Cambridge University Press:  23 January 2025

Meghana Ayyagari Open the ORCID record for Meghana Ayyagari [Opens in a new window] ,
Yuxi Cheng  and
Ariel Weinberger
Meghana Ayyagari*
Affiliation:
George Washington University School of Business
Yuxi Cheng
Affiliation:
University of Liverpool Management School Yuxi.Cheng@liverpool.ac.uk
Ariel Weinberger
Affiliation:
George Washington University School of Business aweinberger@gwu.edu
*
ayyagari@gwu.edu (corresponding author)
Get access Rights & Permissions [Opens in a new window]

Abstract

Using high-frequency data on over 7 million import transactions, we study the disruptions to U.S. firms’ trade patterns and growth immediately following the initial COVID-19 trade shock. While large firms were not direct recipients of government fiscal support, they experienced fewer disruptions when located in counties where small businesses (SMEs) received government stimulus loans under the Paycheck Protection Program. These effects were largest in counties with greater share of SMEs and stronger input–output linkages between large firms and SMEs. Our results point to local spillovers between SMEs and large firms as being an important determinant of firm resiliency during crises.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 60 , Issue 3 , May 2025 , pp. 1527 - 1557
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

Footnotes

We thank Senay Agca, Anne Helene Beck, Vineet Bhagwat, Juan Pablo Chauvin, Michael Faulkender, Noel Maurer, Anu Phene, Jennifer Spencer, Rob Weiner, and seminar participants at George Washington University, Peking University, Temple University, 2021 meetings of the UEA, 2022 Midwest Trade Meetings, and 2023 WAITS for helpful comments and suggestions. All errors are our own.

References

Acharya, V. V., and Steffen, S.. “The Risk of Being a Fallen Angel and the Corporate Dash for Cash in the Midst of COVID.” Review of Corporate Finance Studies, 9 (2020), 430–471.CrossRefGoogle Scholar
Agarwal, S.; Ambrose, B. W.; Lopez, L. A.; and Xiao, X.. “Did the Paycheck Protection Program Help Small Businesses? Evidence from Commercial Mortgage-Backed Securities.” American Economic Journal: Economic Policy, 16 (2024), 95–132.Google Scholar
Agarwal, S., and Hauswald, R.. “Distance and Private Information in Lending.” Review of Financial Studies, 23 (2010), 2757–2788.CrossRefGoogle Scholar
Aiyar, S. S.; Malacrino, D.; Mohommad, A.; and Presbitero, A.. “International Trade Spillovers from Domestic COVID-19 Lockdowns.” IMF Working Paper No. 2022/120 (2022).Google Scholar
Albuquerque, R.; Koskinen, Y.; Yang, S.; and Zhang, C.. “Resiliency of Environmental and Social Stocks: An Analysis of the Exogenous COVID-19 Market Crash.” Review of Corporate Finance Studies, 9 (2020), 593–621.CrossRefGoogle Scholar
Alfaro, L.; García-Santana, M.; and Moral-Benito, E.. “On the Direct and Indirect Real Effects of Credit Supply Shocks.” Journal of Financial Economics, 139 (2021), 895–921.CrossRefGoogle Scholar
Antras, P. “Firms, Contracts, and Trade Structure.” Quarterly Journal of Economics, 118 (2003), 1375–1418.CrossRefGoogle Scholar
Autor, D.; Lutz, B.; Cho, D.; Crane, L.; Ratner, D.; Perterman, W.; Villar, D.; Montes, J.; Yildirmaz, A.; and Goldar, M.. “An Evaluation of the Paycheck Protection Program Using Administrative Payroll Microdata.” In 113th Annual Conference on Taxation (2020).Google Scholar
Bachas, N.; Kim, O. S.; and Yannelis, C.. “Loan Guarantees and Credit Supply.” Journal of Financial Economics, 139 (2021), 872–894.CrossRefGoogle Scholar
Bai, J. J.; Brynjolfsson, E.; Jin, W.; Steffen, S.; and Wan, C.. “Digital Resilience: How Work-From-Home Feasibility Affects Firm Performance.” NBER Working Paper No. 28588 (2021).Google Scholar
Barrios, J. M.; Benmelech, E.; Hochberg, Y. V.; Sapienza, P.; and Zingales, L.. “Civic Capital and Social Distancing During the COVID-19 Pandemic.” Journal of Public Economics, 193 (2021), 104310.CrossRefGoogle ScholarPubMed
Barry, J. W.; Campello, M.; Graham, J. R.; and Ma, Y.. “Corporate Flexibility in a Time of Crisis.” Journal of Financial Economics, 144 (2022), 780–806.CrossRefGoogle Scholar
Bartik, A. W.; Cullen, Z. B.; Glaeser, E. L.; Luca, M.; Stanton, C. T.; and Sunderam, A.. “The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses.” NBER Working Paper No. 27623 (2021).Google Scholar
Bartlett, R. P., and Morse, A.. “Small Business Survival Capabilities and Policy Effectiveness: Evidence from Oakland.” Journal of Financial and Quantitative Analysis, 56 (2021), 2500–2544.CrossRefGoogle Scholar
Berger, A. N.; Bouwman, C. H.; Norden, L.; Roman, R. A.; Udell, G. F.; and Wang, T.. “Is a Friend in Need a Friend Indeed? How Relationship Borrowers Fare During the COVID-19 Crisis.” How Relationship Borrowers Fare during the COVID-19 Crisis (December 25, 2020).CrossRefGoogle Scholar
Berger, A. N.; Miller, N. H.; Petersen, M. A.; Rajan, R. G.; and Stein, J. C.. “Does Function Follow Organizational Form? Evidence from the Lending Practices of Large and Small Banks.” Journal of Financial Economics, 76 (2005), 237–269.CrossRefGoogle Scholar
Bernard, A. B.; Jensen, J. B.; and Schott, P. K.. Importers, Exporters and Multinationals: A Portrait of Firms in the U.S. that Trade Goods. Chicago, IL: University of Chicago Press (2009), 513–552.Google Scholar
Bernard, A. B.; Moxnes, A.; and Ulltveit-Moe, K. H.. “Two-Sided Heterogeneity and Trade.” Review of Economics and Statistics, 100 (2018), 424–439.CrossRefGoogle Scholar
Bernstein, S.; Colonelli, E.; Giroud, X.; and Iverson, B.. “Bankruptcy Spillovers.” Journal of Financial Economics, 133 (2019), 608–633.CrossRefGoogle Scholar
Berthou, A., and Stumpner, S.. “Trade Under Lockdown.” Working Paper No. 867, Banque de France (2022).Google Scholar
Bonadio, B.; Huo, Z.; Levchenko, A. A.; and Pandalai-Nayar, N.. “Global Supply Chains in a Pandemic.” Journal of International Economics, 133 (2021), 103534.CrossRefGoogle Scholar
Brown, J. D., and Earle, J. S.. “Finance and Growth at the Firm Level: Evidence from SBA Loans.” Journal of Finance, 72 (2017), 1039–1080.CrossRefGoogle Scholar
Carvalho, V. M.; Nirei, M.; Saito, Y. U.; and Tahbaz-Salehi, A.. “Supply Chain Disruptions: Evidence from the Great East Japan Earthquake.” Quarterly Journal of Economics, 136 (2021), 1255–1321.CrossRefGoogle Scholar
Cerdeiro, D., and Komaromi, A.. “Supply Spillovers During the Pandemic: Evidence from High-Frequency Shipping Data.” SSRN Working Paper 3772489 (2020).Google Scholar
Chetty, R.; Friedman, J. N.; and Stepner, M.. “The Economic Impacts of COVID-19: Evidence from a New Public Database Built Using Private Sector Data.” Quarterly Journal of Economics, 139 (2024), 829–889.CrossRefGoogle ScholarPubMed
Chinitz, B. “Contrasts in Agglomeration: New York and Pittsburgh.” American Economic Review, 51 (1961), 279–289.Google Scholar
Chodorow-Reich, G.; Darmouni, O.; Luck, S.; and Plosser, M.. “Bank Liquidity Provision Across the Firm Size Distribution.” Journal of Financial Economics, 144 (2022), 908–932.CrossRefGoogle Scholar
Degryse, H., and Ongena, S.. “Distance, Lending Relationships, and Competition.” Journal of Finance, 60 (2005), 231–266.CrossRefGoogle Scholar
Delgado, M.; Porter, M. E.; and Stern, S.. “Clusters and Entrepreneurship.” Journal of Economic Geography, 10 (2010), 495–518.CrossRefGoogle Scholar
Denes, M.; Duchin, R.; and Hackney, J.. “Does Size Matter? The Real Effects of Subsidizing Small Firms.” SSRN Working Paper 3451424 (2021a).Google Scholar
Denes, M.; Lagaras, S.; and Tsoutsoura, M.. “First Served: The Timing of Government Support and Its Impact on Firms.” SSRN Working Paper 3845046 (2021b).CrossRefGoogle Scholar
Ding, W.; Levine, R.; Lin, C.; and Xie, W.. “Corporate Immunity to the COVID-19 Pandemic.” Journal of Financial Economics, 141 (2021), 802–830.CrossRefGoogle ScholarPubMed
Dougal, C.; Parsons, C. A.; and Titman, S.. “Urban Vibrancy and Corporate Growth.” Journal of Finance, 70 (2015), 163–210.CrossRefGoogle Scholar
Duranton, G., and Puga, D.. “Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of Products.” American Economic Review, 91 (2001), 1454–1477.CrossRefGoogle Scholar
Duranton, G., and Puga, D.. “Micro-Foundations of Urban Agglomeration Economies.” In Handbook of Regional and Urban Economics, Vol. 4. Elsevier (2004), 2063–2117.Google Scholar
Ellison, G.; Glaeser, E. L.; and Kerr, W. R.. “What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns.” American Economic Review, 100 (2010), 1195–1213.CrossRefGoogle Scholar
Fahlenbrach, R.; Rageth, K.; and Stulz, R. M.. “How Valuable is Financial Flexibility when Revenue Stops? Evidence from the COVID-19 Crisis.” Review of Financial Studies, 34 (2021), 5474–5521.CrossRefGoogle Scholar
Faulkender, M.; Jackman, R.; and Miran, S.. “The Job-Preservation Effects of Paycheck Protection Program Loans.” Working Paper 2020-01, Office of Economic Policy (2021).Google Scholar
Flaaen, A.; Haberkorn, F.; Lewis, L.; Monken, A.; Pierce, J.; Rhodes, R.; and Yi, M.. “Bill of Lading Data in International Trade Research with an Application to the COVID-19 Pandemic.” Review of International Economics, 31 (2023), 1146–1172.CrossRefGoogle Scholar
Gathman, C.; Helm, I.; and Schonberg, U.. “Spillover Effects of Mass Layoffs.” Journal of the European Economic Association, 18 (2020), 427–468.CrossRefGoogle Scholar
Gaubert, C. “Firm Sorting and Agglomeration.” American Economic Review, 108 (2018), 3117–53.CrossRefGoogle Scholar
Giannetti, M., and Saidi, F.. “Shock Propagation and Banking Structure.” Review of Financial Studies, 32 (2019), 2499–2540.CrossRefGoogle Scholar
Giroud, X., and Mueller, H. M.. “Firms’ Internal Networks and Local Economic Shocks.” American Economic Review, 109 (2019), 3617–49.CrossRefGoogle Scholar
Glaeser, E. L., and Gottlieb, J. D.. “The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States.” Journal of Economic Literature, 47 (2009), 983–1028.CrossRefGoogle Scholar
Glaeser, E. L.; Kerr, S. P.; and Kerr, W. R.. “Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines.” Review of Economics and Statistics, 97 (2015), 498–520.CrossRefGoogle Scholar
Glaeser, E. L., and Kerr, W. R.. “Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?” Journal of Economics & Management Strategy, 18 (2009), 623–663.Google Scholar
Gourinchas, P.-O.; Kalemli-Özcan, Ş.; Penciakova, V.; and Sander, N.. “COVID-19 and Small-and Medium-Sized Enterprises: A 2021 “Time Bomb”?” In AEA Papers and Proceedings, Vol. 111, 282–286 (2021).CrossRefGoogle Scholar
Granja, J.; Makridis, C.; Yannelis, C.; and Zwick, E.. “Did the Paycheck Protection Program Hit the Target?” Journal of Financial Economics, 145 (2022), 725–761.CrossRefGoogle ScholarPubMed
Granja, J.; Matvos, G.; and Seru, A.. “Selling Failed Banks.” Journal of Finance, 72 (2017), 1723–1784.CrossRefGoogle Scholar
Greenstone, M.; Hornbeck, R.; and Moretti, E.. “Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings.” Journal of Political Economics, 118 (2010), 536–598.CrossRefGoogle Scholar
Greenwald, D. L.; Krainer, J.; and Pascal, P.. “The Credit Channel.” Working Paper 2020-26, Federal Reserve Bank of San Francisco (2023).Google Scholar
Handley, K.; Kamal, F.; and Monarch, R.. “Supply Chain Adjustments to Tariff Shocks: Evidence from Firm Trade Linkages in the 2018–2019 U.S. Trade War.” NBER Working Paper No. 31602 (2023).Google Scholar
Handley, K., and Limão, N.. “Policy Uncertainty, Trade, and Welfare: Theory and Evidence for China and the United States.” American Economic Review, 107 (2017), 2731–2783.CrossRefGoogle Scholar
Hoberg, G., and Maksimovic, V.. “Redefining Financial Constraints: A Text-Based Analysis.” Review of Financial Studies, 28 (2015), 1312–1352.CrossRefGoogle Scholar
Howell, S. T. “Financing Innovation: Evidence from R&D Grants.” American Economic Review, 107 (2017), 1136–1164.CrossRefGoogle Scholar
Jain, N., and Wu, D. A.. “Can Global Sourcing Strategy Predict Stock Returns?” Manufacturing & Service Operations Management, 25 (2023), 1357–1375.CrossRefGoogle Scholar
Khwaja, A. I., and Mian, A.. “Tracing the Impact of Bank Liquidity Shocks: Evidence from an Emerging Market.” American Economic Review, 98 (2008), 1413–1442.CrossRefGoogle Scholar
Knack, S. “Social Capital and State Government Quality.” American Journal of Political Science, 46 (2002), 772–785.CrossRefGoogle Scholar
Lafrogne-Joussier, R.; Martin, J.; and Mejean, I.. “Supply Shocks in Supply Chains: Evidence from the Early Lockdown in China.” IMF Economic Review, 71 (2023), 170–215.CrossRefGoogle Scholar
Lerner, J. “The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program.” Journal of Private Equity, 3 (2000), 55–78.CrossRefGoogle Scholar
Levine, R.; Lin, C.; and Xie, W.. “Local Financial Structure and Economic Resilience.” SSRN 3755560 (2020).Google Scholar
Li, L., and Strahan, P. E.. “Who Supplies PPP Loans (and Does It Matter)? Banks, Relationships, and the COVID Crisis.” Journal of Financial and Quantitative Analysis, 56 (2021), 2411–2438.CrossRefGoogle Scholar
Lins, K. V.; Servaes, H.; and Tamayo, A.. “Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility During the Financial Crisis.” Journal of Finance, 72 (2017), 1785–1824.CrossRefGoogle Scholar
Monarch, R. ““It’s Not You, It’s Me”: Prices, Quality, and Switching in US-China Trade Relationships.” Review of Economics and Statistics, 104 (2022), 909–928.CrossRefGoogle Scholar
Moretti, E. “Local Multipliers.” American Economic Review, 100 (2010), 373–377.CrossRefGoogle Scholar
Nakamura, R., and Paul, C. J. M.. “Measuring Agglomeration.” In Handbook of Regional Growth and Development Theories. Edward Elgar Publishing (2019).Google Scholar
Nguyen, H.-L. Q. “Are Credit Markets Still Local? Evidence from Bank Branch Closings.” American Economic Journal: Applied Economics, 11 (2019), 1–32.Google Scholar
Notteboom, T.; Pallis, T.; and Rodrigue, J.-P.. “Disruptions and Resilience in Global Container Shipping and Ports: The COVID-19 Pandemic Versus the 2008–2009 Financial Crisis.” Maritime Economics & Logistics, 23 (2021), 179–210.CrossRefGoogle Scholar
Peek, J., and Rosengren, E. S.. “Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States.” American Economic Review, 90 (2000), 30–45.CrossRefGoogle Scholar
Petersen, M. A., and Rajan, R. G.. “The Benefits of Lending Relationships: Evidence from Small Business Data.” The Journal of Finance, 49 (1994), 3–37.CrossRefGoogle Scholar
Ramelli, S., and Wagner, A. F.. “Feverish Stock Price Reactions to COVID-19.” Review of Corporate Finance Studies, 9 (2020), 622–655.CrossRefGoogle Scholar
Wang, J.; Yang, J.; Iverson, B. C.; and Kluender, R.. “Bankruptcy and the COVID-19 Crisis.” Working Paper No. 21-041, Harvard University (2020).Google Scholar
Supplementary material: File

Ayyagari et al. supplementary material

Ayyagari et al. supplementary material
Download Ayyagari et al. supplementary material(File)
File 444.8 KB