Summary of the Chief Economists February Roundtable

Business insolvencies and investment levels

A roundtable on business insolvencies and investment levels  

February 16th, 2021

By Maritere Hernández, Advisor, The Montreal Group

Since the outburst of the COVID-19 pandemic, a growing fear of companies being unable to meet their financial obligations permeated the global entrepreneurial ecosystem. Banks, research centers and universities all sought to find the best ways for national authorities to support SMEs in their acute liquidity constraints and avoid an unnecessary increase in bankruptcies. To this end, the OECD published a policy response with complementary measures to support viable businesses during the pandemic and mitigate their solvency problems; among them, insolvency relief tools, indirect strengthening of cash flow and direct provision of cash flow, were proposed (2020, p.2). 

As we begin the second year of the pandemic, the aforementioned entities reflect on the effectiveness of governmental measures provided in 2020. As part of this reflection, the Chief Economists of The Montreal Group participated in their monthly roundtable to share their views on record insolvencies for SMEs in 2021 and their forecasts on SMEs investment growth in the coming year.




On February 16th at 9am (EST) Mabel González (Operations Manager at The Montreal Group) opened the meeting, which was moderated by Pierre Cléroux (from BDC, Canada). They were joined by Joseph Nnanna (from the Development Bank of Nigeria), Fabio Giambiagi(from BNDES, Brazil), Hikaru Fukanuma(from Japan Finance Corporation), Armando Gamboa (from NAFIN, Mexico), Baptiste Thornary and Philippe Mutricy (from Bpifrance), Abdelmoumen Abdelmoughite (from CCG, Morocco)and Timo Lindholm (from Finnvera, Finland). 

In response to the question about the level of bankruptcies, most of the participants noted an interesting trend: there was an unexpected decrease in insolvencies during the 2020 year (with Japan claiming only 10% of the country’s bankruptcies were caused by COVID-19). Some, including Canada, explained that this decline is partly a result of the government aid received by SMEs, while France added that the real effects will be seen later on, once administrative measures are lifted. The Chief Economists also mentioned the sectors where most of these businesses were located; Morocco stated that the majority of its national insolvencies were micro and small enterprises (99%) and Mexico further described that most of its insolvent businesses were part of the informal sector, and thus were not able to access the financing they needed to survive. 

Quite interestingly, some countries explained that although the level of insolvencies did not increase, the number of companies did drop. These figures indicate that many businesses decided to close as a result of the pandemic; not surprisingly many of them were owned by solo entrepreneurs (Canada) or by older entrepreneurs of the tourism & restaurant sector (Japan). When asked about the magnitude of SMEs business investment, participants commented on the universal decline in investment during 2020, with the exception of technology, a business investment that increased due to the importance of teleworking & e-commerce during the lockdowns.

After a fruitful conversation characterized by similar patterns, the roundtable ended with some questions to be addressed in the future: What will happen this year as loan programs and bankruptcy amendments cease to exist? Will SMEs benefit from an increased cash flow as restrictions are lifted and consumption resumes? Or will these economies suffer from a high number of delayed insolvencies as liquidity measures slowly disappear? Only time will tell, but for now it is clear that government measures have successfully sustained SMEs in their solvency problems throughout the first year of the COVID-19 crisis.


“Supporting businesses in financial distress to avoid insolvency during the COVID-19 crisis” in OECD Policy Responses to Coronavirus (COVID-19). OECD, May 7th 2020,

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