The Bank of England has published a staff working paper that uses administrative firm-level data from Türkiye to examine whether digital investment before Covid-19 improved resilience during the shock and recovery. The paper, presented as research in progress rather than Bank policy, finds that firms with higher pre-pandemic digitalisation outperformed comparable less digitalised firms in 2020 and 2021, with 3% higher total assets, 4% higher net sales and 2% higher employment, alongside gains in profitability, return on assets and export share. The research builds a digitalisation index from firm-to-firm trade transactions covering software, hardware, consultancy, telecommunications and data services, then applies matching and difference-in-differences methods. It finds the performance gap emerged in 2020 and persisted into 2021. The paper also points to possible transmission channels, with more digitalised firms adding 3% more trading partners, trading over 2% greater distances, reducing labour churn and recording higher productivity. Results were strongest and most statistically precise for micro and small firms, and the authors report that placebo and alternative-specification checks broadly support the findings.
Bank of England2026-05-22
Bank of England publishes working paper finding pre-pandemic digitalisation improved Turkish firms’ performance through and after Covid-19
The Bank of England has published a staff working paper using firm-level data from Türkiye to assess whether pre-Covid-19 digital investment improved firms’ resilience during the pandemic. The research finds that more digitalised firms outperformed comparable peers in 2020–2021 across assets, sales, employment, profitability and exports, with effects strongest for micro and small firms. It attributes these gains to channels including more trading partners, longer-distance trade, lower labour churn and higher productivity, and notes that robustness checks support the results.