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Restaurants’ Solvency in Portugal during COVID-19

Author

Listed:
  • Conceição Gomes

    (CiTUR Centre for Tourism Research, Development and Innovation, Polytechnic University of Leiria, 2411-901 Leiria, Portugal)

  • Filipa Campos

    (CiTUR Centre for Tourism Research, Development and Innovation, Polytechnic University of Leiria, 2411-901 Leiria, Portugal)

  • Cátia Malheiros

    (CiTUR Centre for Tourism Research, Development and Innovation, Polytechnic University of Leiria, 2411-901 Leiria, Portugal)

  • Luís Lima Santos

    (CiTUR Centre for Tourism Research, Development and Innovation, Polytechnic University of Leiria, 2411-901 Leiria, Portugal)

Abstract

The main purpose of this study is to understand how Portuguese restaurants’ solvency was affected by the COVID-19 pandemic, considering the factors that influence it. Financial information was collected for the years 2019 and 2020 in the SABI database to elaborate a quantitative methodology; a descriptive analysis was used and Pearson’s correlation coefficient, a Paired t -test, a one-way ANOVA test, and a multiple linear regression were used to test the formulated hypotheses. The findings confirm that solvency is affected by several determinants, such as financial autonomy, indebtedness, financial leverage, asset turnover, return on equity, and long-term bank debt. Solvency is influenced positively by financial autonomy and financial leverage. In contrast, solvency is negatively influenced by indebtedness, asset turnover, and long-term bank debt. Additionally, this paper represents the first study, in the restaurant sector in Portugal, which analyses the importance of solvency and its determinants, by facing a normal year with a crisis year. The paper is innovative in terms of knowledge about restaurant solvency behavior in periods of financial crisis and also because the COVID-19 pandemic has added an additional variable to restaurant solvency: short-term bank debt. In terms of theoretical implications, this study provides further insights about the factors influencing solvency in restaurant businesses during periods of a financial crisis. The main practical contributions are linked to improving the leadership skills of restaurant owners and managers to deal with periods of crisis in general, thus improving the solvency of their businesses and decreasing the risks associated with bankruptcy.

Suggested Citation

  • Conceição Gomes & Filipa Campos & Cátia Malheiros & Luís Lima Santos, 2023. "Restaurants’ Solvency in Portugal during COVID-19," IJFS, MDPI, vol. 11(2), pages 1-16, April.
    • Handle: RePEc:gam:jijfss:v:11:y:2023:i:2:p:63-:d:1131723
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    References listed on IDEAS

    as
    1. Bao, Zhengyang & Huang, Difang, 2021. "Shadow Banking in a Crisis: Evidence from Fintech During COVID-19," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(7), pages 2320-2355, November.
    2. Díez, Federico J. & Duval, Romain & Maggi, Chiara, 2022. "Supporting SMEs during COVID-19: The case for targeted equity injections," Economics Letters, Elsevier, vol. 219(C).
    3. Alexandra Horobet & Stefania Cristina Curea & Alexandra Smedoiu Popoviciu & Cosmin-Alin Botoroga & Lucian Belascu & Dan Gabriel Dumitrescu, 2021. "Solvency Risk and Corporate Performance: A Case Study on European Retailers," JRFM, MDPI, vol. 14(11), pages 1-34, November.
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