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External financial dependence and firms' crisis performance across Europe

Eppinger, Peter S. and Neugebauer, Katja (2022) External financial dependence and firms' crisis performance across Europe. Empirical Economics, 62 (2). 887 - 904. ISSN 0377-7332

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Identification Number: 10.1007/s00181-021-02025-3


How do financial market conditions affect real economic performance? Empirical investigations of this question have often relied on measures of external financial dependence (EFD) that are constructed using US data and applied to other countries under the assumption of a stable industry ranking across countries. This paper exploits unique, comparable survey data from seven European countries to show that correlations of EFD across countries are weak, casting some doubt on this assumption. We then use the novel survey-based EFD index to show that the global financial crisis had a disproportionately negative impact on the real performance of financially dependent firms. Further investigations highlight the importance of supply chains in propagating the credit shock.

Item Type: Article
Official URL:
Additional Information: © 2021 The Author(s)
Divisions: Systemic Risk Centre
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G1 - General Financial Markets > G10 - General
G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification and Scope, Age, Profit, and Sales
F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
G - Financial Economics > G0 - General > G00 - General
D - Microeconomics > D2 - Production and Organizations > D20 - General
Date Deposited: 06 Feb 2024 19:03
Last Modified: 16 May 2024 04:20

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