Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222293 
Year of Publication: 
2020
Series/Report no.: 
IWH Discussion Papers No. 12/2020
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
We assess the cleansing effects of the recent banking crisis. In U.S. regions with higher levels of supervisory forbearance on distressed banks during the crisis, there is less restructuring in the real sector and the banking sector remains less healthy for several years after the crisis. Regions with less supervisory forbearance experience higher productivity growth after the crisis with more firm entries, job creation, and employment, wages, patents, and output growth. Supervisory forbearance is greater for state-chartered banks and in regions with weaker banking competition and more independent banks, while recapitalisation of distressed banks through TARP does not facilitate cleansing.
Subjects: 
cleansing effect
banking crises
supervisory for bearance
productivity growth
JEL: 
G01
G21
G28
O43
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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