Corporate Resilience to Banking Crises: The Roles of Trust and Trade Credit

Ross Levine (), Chen Lin and Wensi Xie

No 22153, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Are firms more resilient to systemic banking crises in economies with higher levels of social trust? Using firm-level data in 34 countries from 1990 through 2011, we find that liquidity-dependent firms in high-trust countries obtain more trade credit and suffer smaller drops in profits and employment during banking crises than similar firms in low-trust economies. The results are consistent with the view that when banking crises block the normal banking-lending channel, greater social trust facilitates access to informal finance, cushioning the effects of these crises on corporate profits and employment.

JEL-codes: D22 G01 G21 G32 Z13 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-soc
Note: CF EFG IFM LS
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Citations: View citations in EconPapers (5)

Published as Ross Levine & Chen Lin & Wensi Xie, 2018. "Corporate Resilience to Banking Crises: The Roles of Trust and Trade Credit," Journal of Financial and Quantitative Analysis, vol 53(04), pages 1441-1477.

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Journal Article: Corporate Resilience to Banking Crises: The Roles of Trust and Trade Credit (2018)
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