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Assessing corporate vulnerabilities in the euro area

Giulio Nicoletti, Ralph Setzer (), Mika Tujula and Peter Welz

Economic Bulletin Articles, 2022, vol. 2

Abstract: The negative impact of the pandemic on the euro area corporate sector has been mitigated by an effective monetary, fiscal and supervisory policy response. This is also reflected in a low number of corporate insolvency cases. Looking ahead, the balance sheet health of firms and, by extension, the asset quality of banks hinge on the strength of the economic recovery and the financing conditions for firms. Higher corporate indebtedness could dampen investment, posing a risk to the economic recovery. For small and medium-sized enterprises, the pandemic could add to pre-existing vulnerabilities. Structural policies to improve the business environment, including policies aimed at broadening the sources of funding available to firms beyond debt financing, could support sustainable investment growth. JEL Classification: E22, F34, G32

Keywords: Corporate vulnerabilities; COVID-19 pandemic; indebtedness; structural change (search for similar items in EconPapers)
Date: 2022-03
Note: 1128184
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