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External financial dependence and firms' crisis performance across Europe

Author

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  • Eppinger, Peter S.
  • Neugebauer, Katja

Abstract

Economic research has often relied on a measure of external financial dependence that is constructed using U.S. data and applied to other countries under the assumption of a stable industry ranking across countries. We exploit unique survey data from seven European countries to show that correlations of financial dependence across countries are weak, questioning this assumption. We then use the novel survey-based measure to show that the global financial crisis had a disproportionately negative impact on the real performance of financially dependent firms.

Suggested Citation

  • Eppinger, Peter S. & Neugebauer, Katja, 2017. "External financial dependence and firms' crisis performance across Europe," LSE Research Online Documents on Economics 70763, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:70763
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    File URL: http://eprints.lse.ac.uk/70763/
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    References listed on IDEAS

    as
    1. Dell'Ariccia, Giovanni & Detragiache, Enrica & Rajan, Raghuram, 2008. "The real effect of banking crises," Journal of Financial Intermediation, Elsevier, vol. 17(1), pages 89-112, January.
    2. Kroszner, Randall S. & Laeven, Luc & Klingebiel, Daniela, 2007. "Banking crises, financial dependence, and growth," Journal of Financial Economics, Elsevier, vol. 84(1), pages 187-228, April.
    3. Antonio Ciccone & Elias Papaioannou, 2016. "Estimating Cross-Industry Cross-Country Interaction Models Using Benchmark Industry Characteristics," NBER Working Papers 22368, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    External financial dependence; financial constraints; financial crisis; firm performance.;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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