Replication data for: Disentangling the Effects of a Banking Crisis: Evidence from German Firms and Counties

Principal Investigator(s): View help for Principal Investigator(s) Kilian Huber

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20161534_ReadMe.pdf	application/pdf	333 KB	10/12/2019 02:46:AM
20161534_dofile.do	text/plain	21 KB	10/12/2019 02:46:AM

Project Description

Summary: Lending cuts by banks directly affect the firms borrowing from them, but also indirectly depress economic activity in the regions in which they operate. This paper moves beyond firm-level studies by estimating the effects of an exogenous lending cut by a large German bank on firms and counties. I construct an instrument for regional exposure to the lending cut based on a historic, postwar breakup of the bank. I present evidence that the lending cut affected firms independently of their banking relationships, through lower aggregate demand and agglomeration spillovers in counties exposed to the lending cut. Output and employment remained persistently low even after bank lending had normalized. Innovation and productivity fell, consistent with the persistent effects.

Scope of Project

Subject Terms: [Firm Bank Relationships, Firm Employment, Firm Balance Sheets]

JEL Classification:
      E32 Business Fluctuations; Cycles
      E44 Financial Markets and the Macroeconomy
      G01 Financial Crises
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
      G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
      R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
      R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics

Geographic Coverage: Germany

Universe: German firms

Data Type(s): observational data

Methodology

Unit(s) of Observation: Firms,

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Published Versions

V1 [2019-10-12]

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DDI 2.5

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