Bankruptcies could trigger ‘protracted’ unemployment – BIS research

Reallocating resources quickly will help reduce the pain of adjustment, economists say

The Bank for International Settlements, Basel
The Bank for International Settlements, Basel
Photo: Ulrich Roth

Bankruptcies due to the Covid-19 crisis could lead to a “protracted” periods of economic weakness, including higher unemployment, a report by the Bank for International Settlements warns.

In the bulletin article, Ryan Niladri Banerjee, Enisse Kharroubi and Ulf Lewrick note bankruptcies have so far been limited, but that could change as government support programmes are withdrawn.

Bankruptcies “weigh heavily” on labour markets, the authors note. Unemployment typically rises three times more

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