Survival of firms during economic crisis

Bosio, Erica, Djankov, Simeon, Jolevski, Filip and Ramalho, Rita (2020) Survival of firms during economic crisis. Financial Markets Group Discussion Papers (797). Financial Markets Group, The London School of Economics and Political Science, London, UK.

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Abstract

We estimate the survival time of nearly 7,000 firms in a dozen of high-income and middle-income countries in a scenario of extreme economic distress, using the World Bank's Enterprises Surveys. Under the assumption that firms have no incoming revenues and cover only fixed costs, the median survival time across industries ranges within 8 to 19 weeks, while on average firms have liquidity to survive between 12 and 38 weeks. Schumpeter's (1934) theory of creative destruction is not corroborated in the data, as potential exit is not predicated on the size of firms, their age or their productivity.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://www.fmg.ac.uk/
Additional Information:	© 2020 The Authors
Divisions:	Financial Markets Group
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
JEL classification:	E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation) G - Financial Economics > G0 - General > G00 - General G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure G - Financial Economics > G3 - Corporate Finance and Governance > G33 - Bankruptcy; Liquidation H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H32 - Firm L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
Date Deposited:	25 May 2023 23:04
Last Modified:	16 Sep 2023 00:00
URI:	http://eprints.lse.ac.uk/id/eprint/118912

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