Bank Failures, Local Business Dynamics, and Government Policy
Salvador Contreras, Manthos D. Delis, Amit Ghosh, Iftekhar Hasan
Small Business Economics,
No. 4,
2022
Abstract
Using MSA-level data over 1994–2014, we study the effect of bank failures on local business dynamics, in the form of net business formation and net job creation. We find that at least one bank failure in the metropolitan statistical area (MSA) with the mean population prevents approximately 475 net businesses from forming in that area, compared with MSAs that experience no bank failures, ceteris paribus. The equivalent effect on net job creation is 16,433 net job losses. Our results are even stronger for small businesses, which are usually more dependent on bank-firm relationships. These effects point to significant welfare losses stemming from bank failures, highlighting an important role for government intervention. We show that the Troubled Asset Relief Program (TARP) is effective in reducing the negative effects of bank failures on local business dynamics. This positive effect of TARP is quite uniform across small and large firms.
Read article
Explaining Wage Losses After Job Displacement: Employer Size and Lost Firm Wage Premiums
Daniel Fackler, Steffen Müller, Jens Stegmaier
Journal of the European Economic Association,
No. 5,
2021
Abstract
This paper investigates whether wage losses after job displacement are driven by lost firm wage premiums or worker productivity depreciations. We estimate losses in wages and firm wage premiums, the latter being measured as firm effects from a two-way fixed-effects wage decomposition. Using new German administrative data on displacements from small and large employers, we find that wage losses are to a large extent explained by losses in firm wage premiums and that premium losses are largely permanent. We show that losses strongly increase with pre-displacement employer size. This provides an explanation for large and persistent wage losses reported in previous displacement studies typically focusing on large employers, only.
Read article
06.10.2021 • 24/2021
IWH Bankruptcy Update: Bankruptcy Figures Remain Low; More Manufacturing Jobs Impacted
The number of corporate bankruptcies in Germany remained near to a historic low in September. However, there was a considerable increase in the share of manufacturing jobs impacted by bankruptcy. These are the key findings of the IWH Bankruptcy Update, published by the Halle Institute for Economic Research (IWH), which provides monthly statistics on corporate bankruptcies in Germany.
Steffen Müller
Read press release
Unternehmensinsolvenzen seit Ausbruch der Pandemie
Steffen Müller
Wirtschaft im Wandel,
No. 2,
2021
Abstract
Die Insolvenzzahlen sind trotz Corona-Krise stark gesunken. Aufgrund zahlreicher Großinsolvenzen wie etwa von Esprit, Hallhuber oder Wirecard war das Jahr 2020 bezogen auf die Zahl der betroffenen Beschäftigten trotzdem ein schwieriges Jahr. Eine Insolvenzwelle mit vielen gefährdeten Jobs ab Sommer 2021 ist aufgrund staatlicher Unterstützungsmaßnahmen und abwartendem Verhalten der Unternehmen eher unwahrscheinlich. Soweit es die Pandemielage zulässt, sollten Stützungsmaßnahmen bereits im Jahr 2021 auf den Prüfstand, um eine „Zombifizierung“ der Wirtschaft zu verhindern.
Read article
06.05.2021 • 13/2021
IWH Bankruptcy Update: Upward Trend in Bankruptcies Stopped; Reintroduction of Filing Requirement Unlikely to Generate Bankruptcy Wave
Following a rising trend in recent months, the number of corporate bankruptcies fell significantly in April. The number of impacted jobs also remained at modest levels. After a recent sharp rise in the bankruptcy statistics for microbusinesses (which has drawn little press attention), the upward trend for this subcategory loses steam. These are the key findings of the IWH Bankruptcy Update, which provides monthly statistics on corporate bankruptcies in Germany.
Steffen Müller
Read press release
08.04.2021 • 10/2021
IWH Bankruptcy Update: Bankruptcy Statistics Rise Again in March
The number of firms declaring bankruptcy in Germany increased once again in March. However, the number of jobs impacted by the bankruptcy of large firms remained constant. The IWH Bankruptcy Report, published by the Halle Institute for Economic Research (IWH), provides a monthly update on German bankruptcy statistics.
Steffen Müller
Read press release
04.02.2021 • 5/2021
IWH Bankruptcy Update: Wave of bankruptcies in retail and hospitality has yet to materialise as downward trend in statistics continues
The number of reported bankruptcies in Germany fell in January 2021. Furthermore, bankruptcy statistics are anticipated to stay at a low level in coming months, according to the Halle Institute for Economic Research (IWH), which provides monthly statistics on corporate bankruptcies in Germany with its IWH Bankruptcy Update.
Steffen Müller
Read press release
03.12.2020 • 24/2020
IWH Bankruptcy Update: Fewer Large Companies Declare Bankruptcy
Following a spike in bankruptcy of large companies, statistics on impacted employees are declining again. The total number of bankruptcies also remains at a low level. Published by the Halle Institute for Economic Research (IWH), the IWH Bankruptcy Update provides monthly statistics on corporate bankruptcies in Germany.
Steffen Müller
Read press release
06.10.2020 • 19/2020
IWH Bankruptcy Update: Bankruptcies Stabilise at a Low Level; Number of Affected Jobs Remains High
The number of companies declaring bankruptcy in Germany was very low in September, and no significant increase is expected in the coming months. By contrast, the number of jobs impacted by corporate bankruptcies remained elevated in September; monthly layoff figures have increased significantly since the beginning of the year. These are the key findings of the IWH Bankruptcy Update, a monthly monitor of insolvency statistics published by the Halle Institute for Economic Research (IWH).
Steffen Müller
Read press release
07.09.2020 • 17/2020
IWH Bankruptcy Update: Bankruptcies Hit New Low; New Outlook Feature
The number of companies reporting bankruptcy in Germany sank to a new low in August. Associated job losses also declined noticeably, following marked increases in prior months. Published by the Halle Institute for Economic Research, the IWH Bankruptcy Update provides monthly statistics on corporate bankruptcies in Germany. Starting this month, the update will also feature a two-month outlook.
Steffen Müller
Read press release