Did the energy crisis drive Europe's bankruptcy wave? Sector exposure, local projections and the country dimension of business failures
Avrupa'daki iflas dalgasını enerji krizi mi tetikledi? Sektörel maruziyet, yerel projeksiyonlar ve işletme iflaslarının ülke boyutu
This paper is under review at a peer-reviewed journal. The journal name and full text will be added after acceptance.
Abstract
Business bankruptcies in the European Union rose well above pre-pandemic levels after 2022, a period of record energy prices. Using quarterly bankruptcy and registration indices for eight sectors in 19 European countries from 2015 to mid-2026, this study tests whether energy-intensive sectors failed more often when energy prices rose. Local projections with a shift-share exposure and country-by-quarter and sector-by-quarter fixed effects find no differential bankruptcy response over two years; the estimates rule out effects larger than about 10% for a sector one standard deviation more energy-intensive during the 2022 shock. Country differences explain 77% of the variation in post-2022 bankruptcies across country-sectors, sectors only 5%. Energy-intensive sectors saw fewer business registrations after price increases, although this result is sensitive to the pandemic years. Europe's bankruptcy wave is therefore a country phenomenon rather than an energy shock.
Keywords
Business failure; Bankruptcy; Energy prices; Firm entry; Local projections; Europe
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