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What Individual Data Tells us about the Covid-19 Impact on Corporate Liquidity in 2020

Author

Listed:
  • Bureau Benjamin,
  • Duquerroy Anne,
  • Giorgi Julien,
  • Lé Mathias,
  • Scott Suzanne,
  • Vinas Frédéric

Abstract

Using rich granular data for over 645 000 French firms in 2020, this paper builds a micro-simulation model to assess the impact of the Covid-19 crisis on corporate liquidity. Going beyond the aggregate picture, we document that while net debt has been fairly stable at the macroeconomic level, individual heterogeneity is widespread. Significant dispersion in changes in net debt prevails both between and within industries, before as well as after public support. We show that the probability to experience a negative liquidity shock - as well as the intensity of this shock - are negatively correlated with the initial credit quality of the firm (based on Banque de France internal ratings). Our model also finds that public support dampens significantly the impact of Covid on the dispersion of liquidity shocks and brings back the distribution of liquidity shocks closer to its pre-crisis path but with fatter tails.

Suggested Citation

  • Bureau Benjamin, & Duquerroy Anne, & Giorgi Julien, & Lé Mathias, & Scott Suzanne, & Vinas Frédéric, 2021. "What Individual Data Tells us about the Covid-19 Impact on Corporate Liquidity in 2020," Working papers 824, Banque de France.
    • Handle: RePEc:bfr:banfra:824
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    File URL: https://publications.banque-france.fr/sites/default/files/medias/documents/wp824_0.pdf
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    Cited by:

    1. Benjamin Bureau & Loriane Py, 2021. "Health crisis: French companies maintained their repayment capacity in 2020 [Crise sanitaire : les entreprises françaises ont préservé leur capacité de remboursement en 2020]," Bulletin de la Banque de France, Banque de France, issue 238.

    More about this item

    Keywords

    Covid-19; Micro-simulation; Non-financial Corporations; Cash Holding; Debt;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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