Corporate Liquidity and Solvency in Europe during COVID-19: The Role of Policies

Author/Editor:

Christian H Ebeke ; Nemanja Jovanovic ; Laura Valderrama ; Jing Zhou

Publication Date:

March 2, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

The spread of COVID-19, containment measures, and general uncertainty led to a sharp reduction in activity in the first half of 2020. Europe was hit particularly hard—the economic contraction in 2020 is estimated to have been among the largest in the world—with potentially severe repercussions on its nonfinancial corporations. A wave of corporate bankruptcies would generate mass unemployment, and a loss of productive capacity and firm-specific human capital. With many SMEs in Europe relying primarily on the banking sector for external finance, stress in the corporate sector could easily translate into pressures in the banking system (Aiyar et al., forthcoming).

Series:

Working Paper No. 2021/056

Frequency:

regular

English

Publication Date:

March 2, 2021

ISBN/ISSN:

9781513570914/1018-5941

Stock No:

WPIEA2021056

Format:

Paper

Pages:

48

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