Unveiling the pandemic's impact: Did COVID-19 drive business failures? A Cutting-Edge Analysis with Spatial Autoregressive Modelling

David Garnés-Galindo, Manuel Ruiz-Marín and María Luz Maté-Sánchez-Val
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David Garnés-Galindo: Universidad Politécnica de Cartagena
Manuel Ruiz-Marín: Universidad Politécnica de Cartagena
María Luz Maté-Sánchez-Val: Universidad Politécnica de Cartagena

INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, 2026, vol. 65, issue 65, 129-142

Abstract: The objective of this study is to estimate the impact of Covid-19 on business behavior and its spatial effect among companies. Four specifications have been developed to analyze the pandemic's influence on key variables determining business behavior: liquidity, indebtedness, profitability, and efficiency. This study has focused on the province of Barcelona, Spain, from which a database of failed and non-failed companies has been compiled, both before and after the pandemic. The models have been estimated using the spatial Seemingly Unrelated Regressions (SUR) methodology, and each equation was estimated following a spatial Differences-in-Differences model. The results confirm that the emergence of Covid-19 has had a significant impact on companies' financial ratios, worsening their positions in terms of liquidity, indebtedness, and efficiency, with the existence of a spatial contagion pattern.

Keywords: Business failure; covid; Differences-in-Differences; current ratio; debt ratio; profitability; efficiency; spatial dependence (search for similar items in EconPapers)
JEL-codes: C01 C14 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:invreg:022924

DOI: 10.38191/iirr-jorr.24.047

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