Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204556
Authors: 
Bersch, Johannes
Degryse, Hans
Kick, Thomas
Stein, Ingrid
Year of Publication: 
2019
Series/Report no.: 
ZEW Discussion Papers 19-041
Abstract: 
How does bank distress impact their customers' probability of default and trade credit availability? We address this question by looking at a unique sample of German firms from 2000 to 2011. We follow their firm-bank relationships through times of distress and crisis, featuring the different transmission of bank distress shocks into already weakened firm balance sheets. We find that a distressed bank bailout, which is subject to restructuring and deleveraging conditions, leads to a bank-induced increase of firms' probabilities of default. Moreover, bailouts tend to reduce trade credit availability and ultimately firms' sales. We further find that the direction and magnitude of the effects depends on firm quality and the relationship orientation of banks.
Subjects: 
bank distress
bank risk channel
firm risk channel
relationship banking
firm defaults
financial crisis
JEL: 
G01
G21
G24
G33
Document Type: 
Working Paper

Files in This Item:
File
Size
672.45 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.