Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311193 
Year of Publication: 
2025
Series/Report no.: 
IWH Discussion Papers No. 3/2025
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
This paper examines how firms' exposure to supply chain disruptions (SCD) affects firm outcomes in the European Union (EU). Exploiting heterogeneous responses to workplace closures imposed by sourcing countries during the pandemic as a shock to SCD, we provide empirical evidence that firms in industries relying more heavily on foreign inputs experience a significant decline in sales compared to other firms. We document that external finance, particularly bank financing, plays a critical role in mitigating the effects of SCD. Furthermore, we highlight the unique importance of bank loans for small and solvent firms. Our findings also indicate that highly diversified firms and those sourcing inputs from less distant partners are less vulnerable to SCD.
Subjects: 
bank debt
external finance
firm sales
supply chains
supply chain disruptions
JEL: 
D22
F14
G21
L14
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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