Abstract

This paper aims to assess the impact of the Great Recession (2008-2014) on firms’ resilience by taking into account their survival paths in the period 2008-2016. We consider a representative sample of 26,104 Italian firms that, on the basis of their ex-ante idiosyncratic characteristics (both financial and structural) shown before the crisis, are grouped into 4 categories: (1) healthy firms, (2) firm with financing problems, (3) firm with solvency problems and (4) firm structurally unstable. Our key finding is that, with the exception of cluster (1), in the other groups the probability of remaining in the market is strongly conditioned by the local context. In particular, being located in Southern Italy hinders firms in terms of survival, irrespective of whether they are financially constrained, have solvency problems or are structurally unsound. Moreover, this taxonomy largely reflects the one recently proposed by the Group of Thirty regarding the most fruitful way to support firms through public policies in the current Covid-19 crisis context. Therefore, our result allows us to better fit into the policy debate on the effectiveness of public policies in supporting firms in the light of the persistent gap between Centre-North and South Italy which, as demonstrated in this paper, is also shown to be important in relation to firms’ resilience