The number of corporate bankruptcies observed between 2020 and 2021, at the height of the COVID-19 pandemic, was particularly low. While 51,145 insolvency proceedings (receivership or liquidation) were recorded in 2019, there were only 31,217 in 2020, and just 27,582 in 2021.
The support measures for businesses that were swiftly put in place during the pandemic enabled many companies to stay in businesses. These likely included businesses enterprises that were fragile and unproductive even before the pandemic hit. However, by its very nature, low productivity – i.e. the low ratio between output and the resources used to generate it – increases the risk of bankruptcy. The cleansing process, which in principle leads to the exit of the…