Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/208275
Authors: 
Kalemli-Ozcan, Sebnem
Laeven, Luc
Moreno, David
Year of Publication: 
2019
Series/Report no.: 
ECB Working Paper 2241
Abstract: 
We quantify the role of financial factors behind the sluggish post-crisis performance of European firms. We use a firm-bank-sovereign matched database to identify separate roles for firm and bank balance sheet weaknesses arising from changes in sovereign risk and aggregate demand conditions. We find that firms with higher debt levels and a higher share of short-term debt reduce their investment more after the crisis. This negative effect is stronger for firms linked to weak banks with exposures to sovereign risk, signifying increased rollover risk. These financial channels explain about 60% of the decline in aggregate corporate investment.
Subjects: 
Firm Investment
Debt Maturity
Rollover Risk
Bank-Sovereign Nexus
JEL: 
E22
E32
E44
F34
F36
G32
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3503-6
Document Type: 
Working Paper

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