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Non-financial corporate health during the pandemic

Author

Listed:
  • de Bondt, Gabe
  • Gieseck, Arne
  • Nicoletti, Giulio
  • Tujula, Mika

Abstract

This box assesses the health of the euro area non-financial corporate sector at an aggregate level during the coronavirus (COVID-19) pandemic using the quarterly sectoral accounts. The results suggest that non-financial corporate liquidity was safeguarded at the aggregated sector level. This was mainly due to a build-up of cash buffers, as is typical for crisis periods, and the timely and extensive reactions from the monetary, fiscal and supervisory authorities. Policy interventions provided direct and indirect support to non-financial corporations and enabled firms to substantially increase their recourse to debt financing. However, non-financial corporate profitability, operating efficiency, indebtedness and vulnerabilities came under pressure, increasing the risk of a rise in firm defaults in the future. JEL Classification: E22, E32

Suggested Citation

  • de Bondt, Gabe & Gieseck, Arne & Nicoletti, Giulio & Tujula, Mika, 2021. "Non-financial corporate health during the pandemic," Economic Bulletin Boxes, European Central Bank, vol. 6.
    • Handle: RePEc:ecb:ecbbox:2021:0006:3
    Note: 337418
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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2021/html/ecb.ebbox202106_03~764f370e02.en.html
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    Citations

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    Cited by:

    1. Lo Duca, Marco & Moccero, Diego & Parlapiano, Fabio, 2024. "The impact of macroeconomic and monetary policy shocks on credit risk in the euro area corporate sector," Working Paper Series 2897, European Central Bank.

    More about this item

    Keywords

    COVID-19; Non-financial corporations; profitability; liquidity; solvency;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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