This paper estimates the survival time of nearly 7,000 firms in a dozen 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 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.
Details
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Author
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Document Date
2020/05/11
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Document Type
Policy Research Working Paper
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Report Number
WPS9239
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2020/05/11
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Disclosure Status
Disclosed
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Doc Name
Survival of Firms during Economic Crisis
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Keywords
descriptive statistic; survival time; retained earnings; corporate income tax rate; access to external finance; metal product manufacturing; total factor productivity
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Citation
Bosio,Erica Djankov,Simeon Jolevski,Filip Ramalho,Rita
Survival of Firms during Economic Crisis (English). Policy Research working paper,no. WPS 9239 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/140091589221773664/Survival-of-Firms-during-Economic-Crisis