Title: Real Effects of the Sovereign Debt Crisis in Europe: Evidence from Syndicated Loans
Abstract: We explore the impact of the credit crunch that followed the European debt crisis on the corporate policies of European firms. We show that banks' exposures to impaired sovereign debt and the risk-shifting behavior of undercapitalized banks contributed significantly to the severity of the crisis. In particular, we present firm-level evidence showing that the lending contraction of banks affected by the crisis depressed the investment, job creation, and sales growth of firms affliated with these banks. Our estimates suggest that the credit crunch explains between one-fifth and one-half of the overall negative real effects suffered by European borrowing firms.
Publication Year: 2015
Publication Date: 2015-01-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 85
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot