Socio-economic conditions and firm survival amid the COVID-19 pandemic: Evidence from Kyushu-Okinawa region, Japan

This paper traces the survival status of 142,902 firms in the Kyushu-Okinawa region of Japan during the COVID-19 pandemic and empirically analyzes its determinants. The estimation results of the Cox proportional hazards model indicate that firms located in Saga, Oita, Miyazaki, and Kagoshima prefectures had statistically significantly higher survival probabilities during the pandemic compared to those in Fukuoka Prefecture. It is also revealed that population density, income level, unemployment rate, tertiary industry size, and the number of domestic and inbound foreign visitors in the pre-pandemic period significantly contributed to firm exits, while economic growth and the size of the secondary industry before the pandemic positively influenced firm survival. The firm exit effects associated with population density, tertiary industry size, and the number of domestic and inbound foreign visitors as socio-economic preconditions starkly reflect the unique characteristics of the pandemic period.