Did the Euro Crisis Affect Non-Financial Firm Stock Prices Through a Financial or Trade Channel?

Stijn Claessens (), Hui Tong and Igor Zuccardi Huertas

No 2011/227, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes through what channels the euro crisis has affected firm valuations globally. It examines stock price responses over the past year for 3045 non-financial firms in 16 countries to three key crisis events. Using pre-crisis benchmarks, it separates effects arising from changes in external financing and trade conditions and examines how bank and trade linkages propagated effects across borders. It finds that policy measures announced impacted financially-constrained firms more, particularly in creditor countries with greater bank exposure to peripheral euro countries. Trade linkages with peripheral countries also played a role, with euro exchange rate movements causing differential effects.

Keywords: WP; bank exposure; trade exposure; firm Size; exposure to PEC; stock price; Euro crisis; non-financial firms; financial channel; trade channel; euro-zone firm; debtor country; Asset prices; Foreign currency exposure; Exports; Foreign banks; Europe; Global; East Asia (search for similar items in EconPapers)
Pages: 40
Date: 2011-09-01
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Citations: View citations in EconPapers (8)

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