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Assessing corporate vulnerabilities in the euro area

Author

Listed:
  • Nicoletti, Giulio
  • Setzer, Ralph
  • Tujula, Mika
  • Welz, Peter

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

Suggested Citation

  • Nicoletti, Giulio & Setzer, Ralph & Tujula, Mika & Welz, Peter, 2022. "Assessing corporate vulnerabilities in the euro area," Economic Bulletin Articles, European Central Bank, vol. 2.
    • Handle: RePEc:ecb:ecbart:2022:0002:2
    Note: 1128184
    as

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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/articles/2022/html/ecb.ebart202202_02~7a61e442be.en.html
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    Citations

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    Cited by:

    1. Galya Taseva, 2023. "Dynamics of the debt burden of non-financial enterprises in Bulgaria during the period 2016-2020," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 380-407.
    2. Barrela, Rodrigo & Lopez-Garcia, Paloma & Setzer, Ralph, 2022. "Medium-term investment responses to activity shocks: the role of corporate debt," Working Paper Series 2751, European Central Bank.

    More about this item

    Keywords

    Corporate vulnerabilities; COVID-19 pandemic; indebtedness; structural change;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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