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Will Schumpeter Catch COVID-19? Evidence from France

Author

Listed:
  • Mathieu Cros

    (BIC - Bordeaux Imaging Center - UB - Université de Bordeaux - Institut François Magendie - INSERM - Institut National de la Santé et de la Recherche Médicale - CNRS - Centre National de la Recherche Scientifique)

  • Anne Epaulard

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)

  • Philippe Martin

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR)

Abstract

We estimate the factors predicting firm failures in the COVID crisisbased on French data in 2020. Although the number of firms filing forbankruptcy was much below its normal level (-36% compared to 2019)the same factors that predicted firm failures (primarily productivity anddebt) in 2019 are at work in a similar way as in 2020. Hence, the selectionprocess, although much reduced, has not been distorted in 2020. At thisstage, partial hibernation rather than zombification characterises theselection into firm survival or failure. We also find that the sectoralheterogeneity of the turnover COVID shock (proxied by the changein credit card transactions) has been largely (but not fully) absorbedby public policy support because it predicts little of the probability ofbankruptcy at the firm level. Finally, we sketch some potential scenariosfor 2021-2022 for different sectors based on our empirical estimates ofpredictors of firm failures.

Suggested Citation

  • Mathieu Cros & Anne Epaulard & Philippe Martin, 2021. "Will Schumpeter Catch COVID-19? Evidence from France," Working Papers hal-03215379, HAL.
    • Handle: RePEc:hal:wpaper:hal-03215379
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    Cited by:

    1. Gil Nogueira, 2022. "Corporate insolvency and restructuring during COVID-19," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    2. C. A. K. Lovell, 2021. "The Pandemic, The Climate, and Productivity," CEPA Working Papers Series WP112021, School of Economics, University of Queensland, Australia.
    3. Katarzyna Boratynska, 2021. "Determinants of Economic Fragility in Central and Eastern European Countries FsQCA Approach," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 827-837.
    4. Florian Eckert & Heiner Mikosch, 2022. "Firm bankruptcies and start-up activity in Switzerland during the COVID-19 crisis," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-25, December.

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