Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/211844 
Year of Publication: 
1999
Series/Report no.: 
Bank of Finland Discussion Papers No. 13/1999
Publisher: 
Bank of Finland, Helsinki
Abstract: 
The paper examines the role of bank relationships in business closures during the Finnish economic crisis of the early 1990s.We utilise a unique panel data set of 474 small and medium-sized firms, for which we have standard accounting information and for which we can in addition identify whether the firm had a lending relationship with the most troubled part of the banking system, namely the Savings Bank of Finland and Skopbank.By estimating a logit model we find that, even accounting for the effects of liquidity, profitability, indebtedness, age and size, firms that had a lending relationship with the savings banks concerned were more likely to close in 1992 than other firms that year or the same firms in other years.Thus being a loan customer of these banks entailed greater risk for firms than having a lending relationship with other intermediaries only in 1992, which was the year the banking sector came to a head.The result lends support to the hypothesis that financial factors affect real outcomes not only through firm and household balance sheets but also through bank behaviour.
Persistent Identifier of the first edition: 
ISBN: 
951-686-622-0
Document Type: 
Working Paper

Files in This Item:
File
Size





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