Digitalisation, Exports, Government Support and Firms' Finances during the COVID-19 Pandemic: Evidence from Central and Eastern Europe*

Abstract

This study examines whether digital technologies and exporting activities are associated with the likelihood of bankruptcy, liquidity issues and overdue financial obligations during the COVID-19 pandemic. Restrictive measures and lockdowns during the pandemic led to the loss of revenue while incurring costs, resulting in financial issues. Using a sample of 8633 firms from the Central and Eastern economies, we estimate a logistic model and find the following: digitalisation is associated with a decrease in the likelihood of liquidity issues and overdue financial issues; exporting firms experience similar financial outcomes to non-exporting firms; firms that expect or receive government support are associated with an increase in the probability of facing financial issues. Policy implications are discussed.