The impact of Covid-19 on the financial structures of belgian companies: Did the solvency of these firms deteriorate?

Abstract

In response to the pandemic that broke out in March 2020, the Belgian government put in place several measures to stop the propagation of the virus (containment, travel bans, business closures, etc.). Consequently, companies could not operate anymore and suffered heavy losses in income. To mitigate this effect and the risk of bankruptcy, the Belgian government granted a lot of compensation and other support measures. In this context, it is important to consider how Covid impacted Belgian enterprises' financial structures and, more precisely, their solvency. Therefore, the research aims to answer the following question: “Did the solvency of Belgian firms deteriorate?”. This question will be answered by using a multiple regression analysis and a logistic regression based on a sample of 12,815 companies. The results showed a positive and significant effect of the pandemic on the solvency of Belgian firms.