Çağatay Bircan, Zsoka Koczan, Alexander Plekhanov, 21 April 2020

Small businesses, especially in retail and services sectors, which account for the vast majority of employment in the European region, have borne the brunt of the COVID-19 crisis. This column provides estimates of job displacement and surveys the policy measures taken by 38 emerging economies in Europe, Central Asia, and the Southern and Eastern Mediterranean in response to the economic disruptions. Given the predominance of small businesses in employment, job displacement rate in many of these economies is expected to reach 30%.  In the presence of constraints on fiscal measures and limited administrative capacity to disburse funding, second-best measures such as price control have been implemented widely.

Dennis Bams, Magdalena Pisa, Christian Wolff, 16 December 2015

Small businesses are the engine of innovation and job creation, and Basel regulation acknowledges their special role and discounts the capital requirements for loans to small firms. This column argues that the Basel requirements overstate the riskiness of small businesses, and that retail exposures are a much safer investment than previously thought. By forcing banks to hold a disproportionately higher amount of capital against such loans, Basel can unintentionally harm lending to small private firms.  

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