Firm Shutdown During the Financial and Sovereign Debt Crises: Empirical Evidence from Portugal

Priscila Ferreira (priscila@eeg.uminho.pt) and George Saridakis

No 61, NIMA Working Papers from Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho

Abstract: We examine how the impact of the recent crises on firm performance, in terms of risk of shutdown, differed depending on firm size. We use a panel of linked employer-employee data covering the period 2002-2012 and investigate whether the effect of firm size varies over the business cycle and with the type of shock associated with two phases of economic contraction: the Financial Crisis and the Sovereign Debt Crisis. Our results show that smaller firms are more likely to shutdown than larger firms, with micro firms being nearly three times more likely to shutdown than large firms. However, within each size band, micro firms are found to experience at least similar rates of survival during the two crises, relative to large firms, to those observed in the pre-crisis period; while medium sized firms are found to be more vulnerable during the financial crisis period, but show more resilience during the sovereign debt crisis. Overall, however, the results suggest that during the sovereign debt crisis firms faced higher probability of closing than during the financial crisis.

Keywords: firm survival; SMEs; financial crisis; sovereign debt crisis; Portugal (search for similar items in EconPapers)
JEL-codes: C33 J21 L25 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2016-06
New Economics Papers: this item is included in nep-bec, nep-ent and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Firm Shutdown During the Financial and the Sovereign Debt Crises: Empirical Evidence from Portugal (2017)
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