Research project studies fiscal policies in COVID times

Research project studies fiscal policies in COVID times

Muscat: A research project funded by the Ministry of Higher Education, Research and Innovation, within the COVID-19 research programme, studied the fiscal policies and corporate trade credit during COVID-19 pandemic. Ahmed Al Hadi from College of Banking and Financial Studies and Dr. Almukhtar Al Abri from Sultan Qaboos University observed the fiscal policies directed at stimulating spending and providing much-needed cash benefits to businesses. It is interesting to see how such measures have affected firms' ability to meet liquidity needs in the short-term. Using a sample of 14, 623 firm-quarter observations representing 56 countries, they found that the monetary policies are associated with lower levels of trade credit. Trade credit is lower in periods of less-restrictive bank credit which have important policy implications for governments as they attempt to help financially constrained businesses survive the pandemic. "This research contributes to the trade credit literature by providing evidence on the pandemic's effect on firm-level supplier-customer relationships. It provides a microanalysis of the effect of monetary, non-conventional monetary, and fiscal policies on corporate trade credit,"Dr. Ahmed Al Hadi said.