The Covid-19 Pandemic and Credit Access to Finance Impact on MSMEs’ Performance and Recovery

Abstract

The COVID-19 pandemic has impacted the economic sector, particularly MSMEs.It promotes the decrease of MSMEs' performance significantly.This research aims to investigate the impact of the COVID-19 pandemic and credit access on MSMEs' performance empirically and provide a recommendation for the best policy to recover the situation for the government of Tangerang Municipality.The sample size was 361 units obtained randomly from MSME entrepreneurs.In collecting the data, it employed a valid and reliable questionnaire.The scale measurement used a Likert scale.The result illustrated the primary problem of MSMEs were the decrease in demand, the capital difficulties, the disrupted materials distribution, and the increase in prices and raw materials.Testing results by using Multiple Regression empirically showed that the COVID-19 pandemic was proven significant in decreasing MSMEs' performance.Meanwhile, access to credit has a significant impact on improving the performance of MSMEs.To accelerate the recovery of MSMEs, local governments should assist in facilitating access to credit for MSME entrepreneurs and provide capital stimulation assistance in the short term.The local government provides local tax incentives, digitalization of marketing, the ease of accessing raw materials, and the entrepreneurs' skills improvement assisted the MSMEs' recovery and consequently improved the MSMEs' performance.

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