Supply chain disruptions and firm outcomes

Michael Koetter, Huyen Nguyen and Sochima Uzonwanne

No 3/2025, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: This paper examines how firms' exposure to supply chain disruptions (SCD) affects firm outcomes in the European Union (EU). Exploiting heterogeneous responses to workplace closures imposed by sourcing countries during the pandemic as a shock to SCD, we provide empirical evidence that firms in industries relying more heavily on foreign inputs experience a significant decline in sales compared to other firms. We document that external finance, particularly bank financing, plays a critical role in mitigating the effects of SCD. Furthermore, we highlight the unique importance of bank loans for small and solvent firms. Our findings also indicate that highly diversified firms and those sourcing inputs from less distant partners are less vulnerable to SCD.

Keywords: bank debt; external finance; firm sales; supply chains; supply chain disruptions (search for similar items in EconPapers)
JEL-codes: D22 F14 G21 L14 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-ind, nep-int and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:311193

DOI: 10.18717/dpkvyj-pm41

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