The COVID-19 Crisis and the Allocation of Capital

Abstract

We summarize and synthesize the results of the articles in this symposium issue on research in financial economics related to the COVID-19 pandemic. We argue that the articles, taken together, present evidence that the pandemic resulted in a distributional shock to capital allocation. The underlying mechanisms include accelerating technological shifts, government stimulus programs, and heterogeneous responses of investors and firms. We augment these articles with evidence on the heterogeneous effects of the pandemic on profitability, payout, investment, employment, and productivity across sectors.