Firm entry and exit dynamics in Austria: uncovering the economic significance of insolvencies beyond simple counts

Helmut Elsinger (), Pirmin Fessler (), Aleksandra Riedl () and Stefan Trappl ()
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Helmut Elsinger: Oesterreichische Nationalbank, Economic Studies Division, http://finance2.bwl.univie.ac.at/members/elsinger/elsinger.htm
Pirmin Fessler: Oesterreichische Nationalbank, Economic Analysis Division
Aleksandra Riedl: Oesterreichische Nationalbank, Foreign Research Division
Stefan Trappl: Oesterreichische Nationalbank

OeNB Bulletin, 2025, issue Q3/25-1, 22

Abstract: In Austria, insolvencies are often narrowly perceived as signs of economic distress and are typically tracked through absolute insolvency counts. This paper challenges the informational value of such counts and reframes insolvency within the broader context of firm turnover, emphasizing the functional role of insolvencies in facilitating resource reallocation and structural transformation. Using firm-level data from the Integrated Firm-Level Database (IFLD) of the Oesterreichische Nationalbank (OeNB), we analyze firm dynamics in Austria between 2019 and 2024. We document that insolvencies constitute a small and stable share of firm exits – averaging around 1% of the firm population – even amid post-pandemic normalization. By constructing weighted insolvency rates based on firms’ total assets, employment, and credit exposure, we show that economically significant firms are less likely to become insolvent. We moreover find that insolvency patterns are concentrated in smaller, less systemically relevant segments of the economy. Sectoral breakdowns confirm these patterns and illustrate the added value of disaggregated metrics. Our results expose the limitations of count-based indicators and highlight the importance of improved microdata and more meaningful metrics to inform forward-looking and efficiency-oriented policy frameworks. Note that while we cannot update all analyses from the paper to the most recent month, our main finding, namely that the insolvency rate remains stable, continues to hold through the first half of 2025.

Keywords: insolvencies; resource allocation; firm turnover; business demography; Austria (search for similar items in EconPapers)
JEL-codes: D22 E61 G33 L25 R30 (search for similar items in EconPapers)
Date: 2025
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