Credit Relationships and Business Bankruptcy During the Great Depression

Mary Hansen and Nicolas Ziebarth

No 2014-11, Working Papers from American University, Department of Economics

Abstract: Credit relationships are sticky. Stickiness makes relationships beneficial for borrowers in distress, but potentially problematic for them when lenders face distress. To examine stickiness in a time of distress, we exploit a natural experiment during the Depression that generated differences in banking outcomes. Using a new dataset from Dun & Bradstreet and original bankruptcy filings, we show that greater distress increased exit by up to 16 percent. Distress did not generate more bankruptcies, but it changed the geographical distribution of creditors of bankrupt businesses. This is consistent with a contraction of business-to-business credit where there was greater distress.

Date: 2014
New Economics Papers: this item is included in nep-ban and nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.17606/jyfm-rt92 First version, 2014 (application/pdf)

Related works:
Journal Article: Credit Relationships and Business Bankruptcy during the Great Depression (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:amu:wpaper:2014-11

Access Statistics for this paper

More papers in Working Papers from American University, Department of Economics
Bibliographic data for series maintained by Thomas Meal ().