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The impact of financial crises on industrial growth: lessons from the last 40 years

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  • Carlos Madeira

Abstract

This work shows the impact of financial crises across industries and the total manufacturing sector. I find both a direct impact of financial crises on all manufacturing growth and an additional effect through an external finance dependence channel. Externally dependent industries experience lower growth during banking and currency crises, especially in emerging markets and developing economies. Banking, currency and sovereign debt crises cause an average reduction in total manufacturing growth of 2.7%, 6% and 1%, respectively, with the direct effect being the most significant component. Finally, I show that macroprudential policies adopted after the Great Financial Crisis attenuated the fall in growth caused by banking crises.

Suggested Citation

  • Carlos Madeira, 2025. "The impact of financial crises on industrial growth: lessons from the last 40 years," Working Papers Central Bank of Chile 1044, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:1044
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