CREDIT IN CRISIS: A COMPREHENSIVE EVALUATION OF ACCESS PROBABILITY FOR ECUADORIAN BUSINESSES DURING THE COVID-19 ERA

Abstract

The global upheaval caused by the COVID-19 pandemic has ushered in unprecedented challenges for businesses, exerting a profound impact on the worldwide economic landscape. Among the myriad concerns confronting companies across the globe, access to financing has emerged as a linchpin for their survival, with Ecuador standing as a poignant case in point. The stringent measures implemented in response to the pandemic, such as lockdowns and a downturn in demand, have erected formidable financial barriers, rendering access to financing a vital lifeline for businesses navigating the tumultuous waters of the pandemic.

This research embarks on a nuanced exploration of the likelihood that Ecuadorian companies secure crucial credit amid the pandemic-induced uncertainties. Drawing upon data gleaned from the 2019 Structured Business Survey and employing logistic probability analysis, the study delves into the intricacies of credit accessibility across diverse economic sectors and activities. A discernible pattern emerges, revealing that the commercial and manufacturing sectors exhibit a higher probability of accessing credit, positioning them as frontrunners in the financial resilience race. In contrast, the mining sector faces the lowest probability of external financing, pointing to distinctive challenges within this domain.

Of paramount significance is the revelation of heightened vulnerability within the commercial and manufacturing sectors, as the pandemic's measures inflict critical blows such as decreased demand and escalated financial burdens stemming from debt restructuring. This underscores the urgent need for a comprehensive approach, necessitating both governmental policies and administrative measures to ameliorate the far-reaching consequences of the pandemic on these sectors.

This research serves as a strategic compass, offering insights to delineate economic sectors and activities in need of targeted financial policies to fortify their capacity to secure financing and weather the ongoing crisis. By illuminating the intricacies of credit accessibility, this study not only informs policymakers but also provides valuable guidance to businesses and stakeholders, fostering a collaborative and adaptive response to navigate the challenges posed by the pandemic.