The impact of financial crises on industrial growth: lessons from the last 40 years

Carlos Madeira

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: This work shows the impact of financial crises across industries and the total manufacturing sector. I find both a direct impact of financial crises on all manufacturing growth and an additional effect through an external finance dependence channel. Externally dependent industries experience lower growth during banking and currency crises, especially in emerging markets and developing economies. Banking, currency and sovereign debt crises cause an average reduction in total manufacturing growth of 2.7%, 6% and 1%, respectively, with the direct effect being the most significant component. Finally, I show that macroprudential policies adopted after the Great Financial Crisis attenuated the fall in growth caused by banking crises.

Date: 2025-06
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Working Paper: The impact of financial crises on industrial growth: lessons from the last 40 years (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:1044

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