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Economic Crisis and Firm Exit: Do Intangibles Matter?

Listed author(s):
  • Landini, Fabio

    ()

    (LUISS School of European Political Economy)

  • Arrighetti, Alessandro

    (University of Parma, Department of Economics)

  • Lasagni, Andrea

    (University of Parma, Department of Economics)

The crisis in the Euro area has caused several business closures, especially in the EMU periphery. In this paper we use an original firm-level dataset on Italy to study the determinants of firm exit during the crisis, having a particular focus on the role of intangibles. We argue that intangibles strengthen the firm’s resilience capacity, and this in turn improves the firms’ ability to cope with adverse and unexpected shocks. We obtain two main results: first we show that intangibles significantly reduce the probability of firm exit, especially during the initial phase of the crisis; second, we find that financial constraints become more relevant than intangibles in explaining firm exit at later stages of the crisis. Thus, the process of firm selection during the crisis has undergone a rapid transformation, with distortions that may lead even skilled firms to exit. Some of the implications of these findings for the EU recovery policies are discussed.

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File URL: http://sep.luiss.it/sites/sep.luiss.it/files/EPE%2010%20Landini%20et%20al.pdf
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Paper provided by LUISS School of European Political Economy in its series SEP Working Papers with number 2015/10.

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Length: 31 pages
Date of creation: 16 Oct 2015
Handle: RePEc:ris:sepewp:2015_010
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Web page: http://sep.luiss.it/
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