Economics, Econometrics and Finance
8 years ago

Bank dependence leads to investment collapse during financial crisis.

ETS Research Bulletin Series
Bank dependence and investment during the financial crisis
Philip Vermeulen

Paper Summary

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The article explores how the financial crisis affected investment, focusing on the impact of bank credit constraints on firms. In the euro area, firms heavily rely on bank loans for financing. The study found that during the crisis, investment dropped significantly, especially for firms that depend on bank credit. This suggests that limitations on bank loans played a key role in the decline of investment during the financial crisis.