The impact of government financial support during COVID-19 on firm performance

This article examines the impact of government financial support provided to firms in Ireland during the COVID-19 pandemic on firm performance. The empirical analysis is underpinned by theoretical models that examine the role of government in providing liquidity to firms in the context of macroeconomic uncertainty. We use firm-level data for the period 2018–2024 and employ Propensity Score Matching (PSM) combined with Staggered Difference-in-Differences (DiD) estimation to isolate the impact of financial support from pre-existing firm characteristics. The results indicate that, on average, the government financial support to firms over 2020–2021 contributed to statistically significant improvements in key economic performance outcomes for beneficiaries, including employment, turnover, exports, and labour productivity.