Pandemics and Firms: Drawing Lessons from History

December 11, 2020

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Format: Chicago

Serhan Cevik, and Fedor Miryugin. Pandemics and Firms: Drawing Lessons from History, (USA: International Monetary Fund, 2020) accessed September 20, 2024

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 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.

Subject: Communicable diseases, COVID-19, Emerging and frontier financial markets, Financial sector development, Population and demographics

Keywords: Firm level, Firm performance, Firm-level, Liquidity pressure, Nonfinancial corporate performance, Nonfinancial firm, Pandemics, Revenue base, Sector peer, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/276
Stock No:

WPIEA2020276
ISBN:

9781513563893
ISSN:

1018-5941

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