Does spatial location affect business liquidations?
by Alexios Makropoulos; Charlie Weir; Xin Zhang
International Journal of Computational Economics and Econometrics (IJCEE), Vol. 12, No. 1/2, 2022

Abstract: Current studies in aggregate business liquidations have paid little attention to the potential importance of firms' geographical (spatial) location. There is some evidence of spatial concentration of economic activity in certain geographical across Europe which crates firm interdependence. However, the literature does not currently provide evidence for the potential existence of spatial effects in business liquidations that could be influenced from business interdependence in certain geographical areas. This study investigates the potential existence of spatial effects in liquidated businesses in a sample of European countries. As such, it investigates the extent to which spatial econometrics can provide further insights into the study of aggregated business liquidations. Statistically significant spatial effects were detected in the form of SE and SD spatial models. These results confirm the existence of spatial effects in business liquidations, implying that the spatial location should be considered for modelling and policy making purposes. As such, further research is needed in this area so as to further explore the impact of the spatial aspect.

Online publication date: Mon, 24-Jan-2022

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