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Pandemics and Firms: Drawing Lessons from History

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  • Mr. Serhan Cevik
  • Fedor Miryugin

Abstract

The global economy is in the midst of an unprecedented slump caused by the COVID-19 pandemic. To assess the likely evolution of nonfinancial corporate performance going forward, this paper investigates empirically the impact of past pandemics using firm-level data on more than 537,000 companies from 14 developing countries during the period 1998–2018. The analysis indicates that the prevalence of infectious diseases has an economically and statistically significant negative effect on nonfinancial corporate performance. This adverse impact is particularly pronounced on smaller and younger firms, compared to larger and more established corporations. We also find that a higher number of infectious-disease cases in population increases the probability of failure among nonfinancial firms, particularly for small and young firms. In the case of COVID-19, the magnitude of these effects will be much greater, given the unprecedented scale of the outbreak and strict policy responses to contain its spread.

Suggested Citation

  • Mr. Serhan Cevik & Fedor Miryugin, 2020. "Pandemics and Firms: Drawing Lessons from History," IMF Working Papers 2020/276, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2020/276
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    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Consequences > Macroeconomic

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    1. Gao, Jingyi, 2022. "Has COVID-19 hindered small business activities? The role of Fintech," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 297-308.
    2. Lim, King Yoong & Morris, Diego, 2023. "Business optimism and the innovation-profitability nexus: Introducing the COVID-19 adaptable capacity framework," Research Policy, Elsevier, vol. 52(1).
    3. Jaisy Aghniarahim Putritamara & Budi Hartono & Hery Toiba & Hamidah Nayati Utami & Moh Shadiqur Rahman & Dewi Masyithoh, 2023. "Do Dynamic Capabilities and Digital Transformation Improve Business Resilience during the COVID-19 Pandemic? Insights from Beekeeping MSMEs in Indonesia," Sustainability, MDPI, vol. 15(3), pages 1-21, January.

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    Keywords

    Pandemics; nonfinancial corporate performance; firm-level; WP; nonfinancial firm; firm level; liquidity pressure; sector peer; firm performance; revenue base;
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