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From the Financial Crisis to the Real Economy: Using Firm-level Data to Identify Transmission Channels

In: Global Financial Crisis

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  • Stijn Claessens
  • Hui Tong
  • Shang-Jin Wei

Abstract

Using accounting data for 7722 non-financial firms in 42 countries, we examine how the 2007–2009 crisis affected firm performance and how various linkages propagated shocks across borders. We isolate and compare effects from changes in business cycle, international trade, and external financing conditions, on firms' profits, sales and investment using both sectoral benchmarks and firm-specific sensitivities estimated prior to the crisis. We find that the crisis had a bigger negative impact on firms with greater sensitivity to business cycle and trade developments, particularly in countries more open to trade. Interestingly, financial openness made limited difference.

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This chapter was published in:

  • Charles Engel & Kristin Forbes & Jeffrey Frankel, 2012. "Global Financial Crisis," NBER Books, National Bureau of Economic Research, Inc, number enge11-2.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 13170.

    Handle: RePEc:nbr:nberch:13170

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    References

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    Citations

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    Cited by:
    1. Salvatore Dell’Erba & Emanuele Baldacci & Tigran Poghosyan, 2013. "Spatial spillovers in emerging market spreads," Empirical Economics, Springer, vol. 45(2), pages 735-756, October.
    2. Kristin Forbes, 2012. "The "Big C": Identifying Contagion," NBER Working Papers 18465, National Bureau of Economic Research, Inc.
    3. Ding, Sai & Guariglia, Alessandra & Knight, John, 2013. "Investment and financing constraints in China: Does working capital management make a difference?," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1490-1507.
    4. Kaplan, David S. & Lederman, Daniel & Robertson, Raymond, 2012. "What drives short-run labor market volatility in offshoring industries ? evidence from northern Mexico during 2007-2009," Policy Research Working Paper Series 6268, The World Bank.
    5. Nguyen, Ha & Qian, Rong, 2013. "Demand collapse or credit crunch to firms ? evidence from the world bank's financial crisis survey in Eastern Europe," Policy Research Working Paper Series 6651, The World Bank.
    6. Yi Wu, 2012. "Performance of Publicly Listed Chilean Firms During the 2008-2009 Global Financial Crisis," IMF Working Papers 12/261, International Monetary Fund.
    7. Biljana Jovanovikj & Ljupka Georgievska, 2013. "Transmission Channels Of The Global Economic Crisis: Micro Evidence For The Republic Of Macedonia," Working Papers 2013-01, National Bank of the Republic of Macedonia.
    8. Steven Ongena & Jose Luis Peydro & Neeltje van Horen, 2013. "Shocks Abroad, Pain at Home? Bank-Firm Level Evidence on the International Transmission of Financial Shocks," DNB Working Papers 385, Netherlands Central Bank, Research Department.
    9. HOSONO Kaoru & TAKIZAWA Miho & TSURU Kotaro, 2013. "International Transmission of the 2008-09 Financial Crisis: Evidence from Japan," Discussion papers 13010, Research Institute of Economy, Trade and Industry (RIETI).
    10. International Monetary Fund, 2011. "Did the Euro Crisis Affect Non-Financial Firm Stock Prices Through a Financial or Trade Channel?," IMF Working Papers 11/227, International Monetary Fund.
    11. Maria Gonzalez, 2012. "Nonfinancial Firms in Latin America," IMF Working Papers 12/279, International Monetary Fund.
    12. Sophia Dimelis & Ioannis Giotopoulos & Helen Louri, 2013. "The credit crunch and firm growth in the euro area: 2005-2011. A quantile panel analysis," Working Papers 165, Bank of Greece.
    13. Kristin J. Forbes, 2012. "The “Big C”: identifying and mitigating contagion," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 23-87.
    14. Leandro Medina, 2012. "Spring Forward or Fall Back? The Post-Crisis Recovery of Firms," IMF Working Papers 12/292, International Monetary Fund.

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