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Survival of firms during economic crisis


  • Bosio, Erica
  • Djankov, Simeon
  • Jolevski, Filip
  • Ramalho, Rita


We estimate the survival time of nearly 7,000 firms in a dozen of high-income and middle-income countries in a scenario of extreme economic distress, using the World Bank's Enterprises Surveys. Under the assumption that firms have no incoming revenues and cover only fixed costs, the median survival time across industries ranges within 8 to 19 weeks, while on average firms have liquidity to survive between 12 and 38 weeks. Schumpeter's (1934) theory of creative destruction is not corroborated in the data, as potential exit is not predicated on the size of firms, their age or their productivity.

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  • Bosio, Erica & Djankov, Simeon & Jolevski, Filip & Ramalho, Rita, 2020. "Survival of firms during economic crisis," LSE Research Online Documents on Economics 118912, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:118912

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    References listed on IDEAS

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    Cited by:

    1. Harasztosi, Péter & Savšek, Simon, 2022. "Productivity and responses to the pandemic: Firm-level evidence," EIB Working Papers 2022/09, European Investment Bank (EIB).
    2. Miyakawa, Daisuke & Oikawa, Koki & Ueda, Kozo, 2021. "Firm Exit during the COVID-19 Pandemic: Evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 59(C).
    3. Magdalena Olczyk & Marta Ewa Kuc-Czarnecka, 2021. "Determinants of COVID-19 Impact on the Private Sector: A Multi-Country Analysis Based on Survey Data," Energies, MDPI, vol. 14(14), pages 1-17, July.
    4. Apergis, Nicholas & Danuletiu, Dan & Xu, Bing, 2022. "CDS spreads and COVID-19 pandemic," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 76(C).
    5. Apergis, Nicholas & Lau, Chi Keung & Xu, Bing, 2023. "The impact of COVID-19 on stock market liquidity: Fresh evidence on listed Chinese firms," International Review of Financial Analysis, Elsevier, vol. 90(C).
    6. Adian,Ikmal & Doumbia,Djeneba & Gregory,Neil & Ragoussis,Alexandros & Reddy,Aarti & Timmis,Jonathan David, 2020. "Small and Medium Enterprises in the Pandemic : Impact, Responses and the Role of Development Finance," Policy Research Working Paper Series 9414, The World Bank.
    7. Benedikt Janzen & Doina Maria Radulescu, 2021. "Effects of Covid-19 Related Government Response Stringency and Support Policies: Evidence from European Firms," CESifo Working Paper Series 9116, CESifo.
    8. Julija Bistrova & Natalja Lace & Ludmila Kasperovica, 2021. "Enterprise Crisis-Resilience and Competitiveness," Sustainability, MDPI, vol. 13(4), pages 1-24, February.
    9. Janzen, Benedikt & Radulescu, Doina, 2022. "Effects of COVID-19 related government response stringency and support policies: Evidence from European firms," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 129-145.
    10. repec:ctc:sdimse:dime21_01 is not listed on IDEAS

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • G00 - Financial Economics - - General - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure


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