Survival of firms during economic crisis

Erica Bosio, Simeon Djankov, Filip Jolevski and Rita Ramalho

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

JEL-codes: E24 G00 G32 G33 H32 L20 L22 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020-05-22
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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http://eprints.lse.ac.uk/118912/ Open access version. (application/pdf)

Related works:
Working Paper: Survival of Firms during Economic Crisis (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:118912

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