Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154254
Authors: 
Popov, Alexander
Rocholl, Jörg
Year of Publication: 
2015
Series/Report no.: 
ECB Working Paper 1821
Abstract: 
This paper identifies the effect of financing constraints on firms’ labor demand. We exploit exogenous funding shocks to German savings banks during the US mortgage crisis that are unrelated to local conditions. We find that firms with credit relationships with affected banks experienced a significant decline in employment and in labor compensation relative to firms whose credit relationships were with healthy banks. We also find that the employment effect increases, and the wage effect decreases with firm size. The decline in employment at firms attached to affected banks appears to be more long-lasting than the decline in labor compensation.
Subjects: 
Credit constraints
employment
financial crisis
labor compensation
JEL: 
D92
G01
G21
J23
J31
ISBN: 
978-92-899-1634-9
Document Type: 
Working Paper

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