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

doi:10.1016/j.frl.2021.102568

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

Financ Res Lett. 2022 Jun:47:102568. doi: 10.1016/j.frl.2021.102568. Epub 2021 Nov 18.

Authors

Nirosha Hewa Wellalage¹, Vijay Kumar¹, Ahmed Imran Hunjra², Mamdouh Abdulaziz Saleh Al-Faryan^{3

4}

Affiliations

¹ School of Accounting, Finance and Economics, The University of Waikato, Hamilton, New Zealand.
² Department of Business Administration, Ghazi University, Dera Ghazi Khan, Pakistan.
³ Department of Accounting and Financial Management, Faculty of Business and Law, University of Portsmouth, UK.
⁴ Consultant in Economics and Finance, Riyadh, Saudi Arabia.

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.

Keywords: COVID-19; Environmental performance; Environmental regulations; Firm financing; Small and medium enterprises (SMEs).