6533b7d7fe1ef96bd1268d8c

RESEARCH PRODUCT

The impact of institutional and macroeconomic conditions on aggregate business bankruptcy

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Abstract This paper investigates the aggregate business bankruptcy in relation to three macro-level factors: the government effectiveness, entrepreneurship activity and control of corruption for six European countries during the period from 2004 to 2017. We employ fuzzy-set qualitative comparative analysis (fsQCA) and partial least squares regression (PLS). Our findings show that countries with a high level of new firm creation and entrepreneurial activity can lead to a rise in the number of company failures. Furthermore, countries with a low corruption index and high levels of government effectiveness can mitigate insolvency. Our results have several policy implications for the evaluation and modification of the bankruptcy legal process.