Long-run Competitive Spillovers of the Credit Crunch
IWH Discussion Papers,
Competition in the U.S. appears to have declined. One contributing factor may have been heterogeneity in the availability of credit during the financial crisis. I examine the impact of product market peer credit constraints on long-run competitive outcomes and behavior among non-financial firms. I use measures of lender exposure to the financial crisis to create a plausibly exogenous instrument for product market credit availability. I find that credit constraints of product market peers positively predict growth in sales, market share, profitability, and markups. This is consistent with the notion that firms gained at the expense of their credit constrained peers. The relationship is robust to accounting for other sources of inter-firm spillovers, namely credit access of technology network and supply chain peers. Further, I find evidence of strategic investment, i.e. the idea that firms increase investment in response to peer credit constraints to commit to deter entry mobility. This behavior may explain why temporary heterogeneity in the availability of credit appears to have resulted in a persistent redistribution of output across firms.
IWH Medium-Term Projection The IWH medium-term projection shows: If Germany wants to stick to both its current debt...
IWH Bankruptcy Research
IWH Bankruptcy Research The Bankruptcy Research Unit of the Halle Institute for...
Postdoctoral Researcher in Productivity Dynamics and Growth (f/m/x, 100%) [2024-06]
Vacancy Postdoctoral Researcher in Productivity Dynamics and...
Postdoctoral Researcher in Labor Economics (f/m/x, 100%) [2024-04]
Vacancy Postdoctoral Researcher in Labor Economics (f/m/x,...
Postdoctoral Researcher in Financial Economics (f/m/x, 100%) [2023-06]
Vacancy Postdoctoral Researcher in Financial Economics (f/m/x,...
IWH EXplore Competitive Funding for Research Projects with External Involvement at...
Financial Linkages and Sectoral Business Cycle Synchronization: Evidence from Europe
IMF Economic Review,
We analyze whether financial integration leads to converging or diverging business cycles using a dynamic spatial model. Our model allows for contemporaneous spillovers of shocks to GDP growth between countries that are financially integrated and delivers a scalar measure of the spillover intensity at each point in time. For a financial network of ten European countries from 1996 to 2017, we find that the spillover effects are positive on average and much larger during periods of financial stress, pointing towards stronger business cycle synchronization. Dismantling GDP growth into value added growth of ten major industries, we observe that spillover intensities vary significantly. The findings are robust to a variety of alternative model specifications.
The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the...