The Long-Run Real Effects of Banking Crises: Firm-Level Investment Dynamics and the Role of Wage Rigidity

Wix, Carlo

doi:10.2139/ssrn.3075810

Cited by 1 publication

(3 citation statements)

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“…We exploit this randomness in cash holdings just prior to the crisis to assuage concerns that our results are driven by the subset of rms with more persistent relative-to-rivals cash holdings. This is similar in spirit to Almeida, Campello, Laranjeira, and Weisbenner (2012) and Wix (2017) who exploit randomness in the moment long-term debt is maturing to identify the impact of rms' leverage on investment and rm growth during the global nancial crisis.…”

mentioning

confidence: 81%

“…Firms that had to roll over a signicant amount of debt during the crisis (e.g. Almeida, Campello, Laranjeira, and Weisbenner, 2012;Wix, 2017;Duval, Hong, and Timmer, 2019) or that faced bigger debt overhang problems (Kalemli-Ozcan, Laeven, and Moreno, 2018) were much more aected by the crisis than others.…”

Section: Contribution To the Literaturementioning

confidence: 99%

“…We address this concern in several ways. First, we measure the rm's relative cash position in 2006, 7 See Jordà, Schularick, and Taylor (2013), Favara and Imbs (2015), Mian, Su, and Verner (2017) and Wix (2017) for recent applications of local projections in nance.…”

Section: Introductionmentioning

confidence: 99%

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All You Need Is Cash: Corporate Cash Holdings and Investment after the Financial Crisis

et al. 2019

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Firms with high pre-crisis cash holdings invested significantly more than their cash-poor rivals during the global financial crisis and especially so during the recovery phase. This resulted in a persistent and growing investment gap between cash-rich and cash-poor firms. Cash especially benefited young and small firms and firms in industries where rivals became more financially constrained. The amplification effect of cash was absent in the period preceding the crisis. The ability to continue to invest allowed cash-rich firms to gain market share and accumulate more profits over the long-run. Having a liquid balance sheet when the credit cycle turns thus gives firms a competitive edge that lasts far beyond the crisis years.

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confidence: 81%

Section: Contribution To the Literaturementioning

confidence: 99%