From North Holland to Drenthe: financial opportunities and risks by province
In our previous blog, we examined how sectors relate to key financial metrics such as equity and total assets. But it’s not just the sector in which a company operates that plays a role in financial health-even the region in which a company is located can have a significant impact.
It is no surprise that provinces such as South Holland and North Holland, with strong economic centers, are the most financially stable. Here, the presence of large companies, financial institutions and a diverse business climate provides a solid economic foundation. But the real insights lie with the other provinces, where the differences are sometimes less obvious. In this analysis, we look at the financial position of companies in different provinces, with a special focus on the percentage of companies with negative equity and possible explanations for this.
Provinces with highest percentage of companies with negative equity
The data show that companies in Groningen have the highest percentage of negative equity (16.57%). This can be partly explained by a combination of economic challenges, such as the impact of earthquakes and less strong economic growth compared to the Randstad. In addition, structural factors such as lower population density and more limited market supply also play a role.
Flevoland (15.74%) and Drenthe (14.96%) also score high when it comes to companies with a negative balance sheet. As a young province, Flevoland is still developing economically, which means that companies here may not yet be exploiting the economies of scale already present in other regions. Drenthe has a strong agricultural sector and therefore has a greater dependence on seasonal market fluctuations, which may affect financial stability.
Interestingly, Friesland(12.74%) and Gelderland (13.89%) actually have a lower percentage of firms with negative equity. This may indicate a more stable economic base and a more balanced sector distribution, with firms less dependent on one specific market or cyclical sector.
Relationship between balance sheet total and equity by province
One of the main indicators of financial stability is the ratio of total assets to equity. In general, counties with higher balance sheet total also have higher equity, indicating a healthier financial structure.
Still, there are interesting discrepancies. For example, Friesland and Flevoland have a relatively high ratio of equity to total assets, indicating that companies here are more financially conservative and less dependent on borrowed capital. In contrast, Groningen has a relatively low ratio, which may indicate a greater reliance on external financing and an increased risk of financial instability.
Number of companies by province and economic diversity
The number of firms by county provides insight into economic activity and the business environment (only firms that have filed financial statements are included).
The data show that Gelderland and South Holland house the most firms, which makes sense given their population density and the presence of large economic centers. Provinces with a lower number of firms, such as Drenthe and Flevoland, may have less economic diversity, making them more vulnerable to sectoral fluctuations.
One notable trend is the impact of e-commerce on the retail sector, which is being hit harder in some provinces than others. Physical stores in less populated areas often have more difficulty competing with large online players, which can contribute to an increased risk of negative equity.
Average size of organizations and capital strength by province
In addition to the number of companies and their financial health, it is also interesting to look at the average size of companies by county. This can be determined by analyzing total balance sheet totals and average equity per company.
As expected, companies in South Holland and North Holland have the highest total balance sheet totals. This confirms that these provinces are the most capital-rich regions in the Netherlands. With large multinationals, financial institutions and a wide range of industries, there is a strong concentration of economic wealth here.
In contrast, in Friesland and Drenthe the average balance sheet size per company is much lower. This indicates a greater distribution of smaller firms and a less capital-rich economy. These provinces rely largely on SMEs, meaning that economic fluctuations here can have a greater impact on individual companies.
This observation confirms that South Holland and North Holland dominate economically, not only in number of companies but also in the capital strength of those companies.
Conclusion: the power of regional insights
This analysis shows that there are significant differences between provinces when it comes to the financial health of businesses. Some regions, such as GroningenandFlevoland, have a relatively high number of firms with negative equity, suggesting structural economic challenges. In contrast, other provinces, such asFrieslandandGelderland, show a more stable financial structure, suggesting that a balanced sectoral distribution and less reliance on cyclical industries may have a positive impact.
In addition, this analysis confirms that South Holland and North Holland are economically the most capital-rich, both in the number of companies and in their financial size. This is to be expected, given the economic centers of gravity in these provinces. Nevertheless, the distributions by province show that not only location, but also sectoral distribution and business strategies have a major influence on financial stability.
It is essential for policymakers and entrepreneurs to understand and respond to these regional differences. Through targeted economic incentives and strategic financing options, businesses in financially vulnerable provinces can be better supported. This not only contributes to a healthier economic base by region, but also strengthens the stability of Dutch business as a whole.
