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.