Bank Distress Leads to Job Losses and Investment Reduction in Germany.
The article explores how the financial crisis in the US affected the real economy globally, focusing on Germany. By studying firm-bank relationships, the researchers found that banks hit by losses during the crisis reduced lending more than others. This led to firms cutting back on investments and jobs, especially if they lacked collateral. However, firms were able to offset some of the credit reduction by seeking new bank relationships, using internal funds, and issuing new equity.