Determinants and consequences of SME insolvency risk during the pandemic

The COVID-19 pandemic posed an existential threat to European SMEs' financial resilience with significant consequences for the European economy. Using unique firm-level data on SME financing conditions, this paper proposes a new insolvency risk measure based on survey responses. We show that SME insolvency risk increased, on average, by approximately 21% during the pandemic. Problems with finding customers and the cost of production and labor contributed notably to SME insolvency risk during this period, and SMEs also saw deterioration in their access to finance. Innovation worked as a mitigating factor during the pandemic, and innovative SMEs were more resilient, maintained their client base, and saw favorable access to bank lending. Our results point out that SME innovation can prevent the number of insolvencies from rising significantly in the long term

Low-volatility strategies for highly liquid cryptocurrencies

Managing extreme price fluctuations in cryptocurrency markets are of central importance for investors in this market segment. Using a sample of highly liquid cryptocurrencies from January 2017 to June 2021, this paper proposes a dynamic investment strategy that selects cryptocurrencies based on their historical volatility and is complemented by a simple stop-loss rule. Our results reveal that investing in highly concentrated low volatility cryptocurrency portfolios with six to twelve months volatility look-back and holding period generate statistically significant excess returns. By including a simple stop-loss rule, the downside risk of cryptocurrency portfolios is reduced markedly, and the Sharpe ratios are improved significantly

Financial resilience of German households to Corona triggered income shock

The outbreak, which brought daily life to a standstill, was a financial storm for households across the globe. In Germany, many employees went to short-time work, while others suffered from unemployment during the pandemic lockdown. Thanks to relatively cautious private consumption compared to household income during regular times, German households are financially resilient to income shocks by and large. Besides, high saving rates and generous unemployment and short-time work benefits help many Germans to overcome income shock triggered by the first corona shutdown. That said, single parents in Germany are particularly vulnerable and will be able to cover their expenses like in regular times up to four months at most if they face short-time work or unemployment

Insolvency risk of European SMEs during pandemic

Covid-19 pandemic poses an existential threat to European SMEs’ financial resilience with significant consequences for the European economy. Using a unique firm-level survey data on SME financing conditions and a new measurement approach, this paper focuses on the insolvency risk of European SMEs and their access to finance around pandemic. We show that SME insolvency risk increased, on average, by around 21% during the pandemic. Finding customers and the cost of production and labor have contributed notably to SME insolvency risk around this period. Heightened insolvency risk results in deterioration in expected access to finance in general. During the pandemic, though, no particular worsening is observed in access to bank lending. Overall, our results have important policy implications for designing suitable policy measures to mitigate SME liquidity shortages and avoid unnecessary insolvencies during and in the aftermath of the pandemic

Insolvency risk of European SMEs during pandemic

Covid-19 pandemic poses an existential threat to European SMEs’ financial resilience with significant consequences for the European economy. Using a unique firm-level survey data on SME financing conditions and a new measurement approach, this paper focuses on the insolvency risk of European SMEs and their access to finance around pandemic. We show that SME insolvency risk increased, on average, by around 21% during the pandemic. Finding customers and the cost of production and labor have contributed notably to SME insolvency risk around this period. Heightened insolvency risk results in deterioration in expected access to finance in general. During the pandemic, though, no particular worsening is observed in access to bank lending. Overall, our results have important policy implications for designing suitable policy measures to mitigate SME liquidity shortages and avoid unnecessary insolvencies during and in the aftermath of the pandemic

Insolvency risk of European SMEs during pandemic

Covid-19 pandemic poses an existential threat to European SMEs’ financial resilience with significant consequences for the European economy. Using a unique firm-level survey data on SME financing conditions and a new measurement approach, this paper focuses on the insolvency risk of European SMEs and their access to finance around pandemic. We show that SME insolvency risk increased, on average, by around 21% during the pandemic. Finding customers and the cost of production and labor have contributed notably to SME insolvency risk around this period. Heightened insolvency risk results in deterioration in expected access to finance in general. During the pandemic, though, no particular worsening is observed in access to bank lending. Overall, our results have important policy implications for designing suitable policy measures to mitigate SME liquidity shortages and avoid unnecessary insolvencies during and in the aftermath of the pandemic

Insolvency risk of European SMEs

Covid-19 pandemic poses an existential threat to European SMEs’ financial resilience with significant consequences for the European economy. Using a unique firm-level survey data on SME financing conditions and a new measurement approach, this paper focuses on the insolvency risk of European SMEs and their access to finance around pandemic. We show that SME insolvency risk increased, on average, by around 21% during the pandemic. Finding customers and the cost of production and labor have contributed notably to SME insolvency risk around this period. Heightened insolvency risk results in deterioration in expected access to finance in general. During the pandemic, though, no particular worsening is observed in access to bank lending. Overall, our results have important policy implications for designing suitable policy measures to mitigate SME liquidity shortages and avoid unnecessary insolvencies during and in the aftermath of the pandemic

Financial resilience of German households to Corona triggered income shock

The outbreak, which brought daily life to a standstill, was a financial storm for households across the globe. In Germany, many employees went to short-time work, while others suffered from unemployment during the pandemic lockdown. Thanks to relatively cautious private consumption compared to household income during regular times, German households are financially resilient to income shocks by and large. Besides, high saving rates and generous unemployment and short-time work benefits help many Germans to overcome income shock triggered by the first corona shutdown. That said, single parents in Germany are particularly vulnerable and will be able to cover their expenses like in regular times up to four months at most if they face short-time work or unemployment