Economics at your fingertips  

Financial Constraints: a Propagation Mechanism of Foreign Shocks

Rosario Aldunate

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: This essay seeks to contribute to the credit-channel literature by studying how the effects of foreign shocks can be amplified in the economy due to the existence of financial constraints at the firm-level in a small open economy as Chile. For this purpose, this study analyzes the evolution of Chilean manufacturing firms between 1995 and 2005 thanks to a panel based on the Annual National Survey of Industries, measures of financial constraints built on the work by Rajan and Zingales (1998) and pays special attention to the Asian crisis, an episode that hit particularly hard the Chilean economy in terms of contraction of the credit flow. Regarding the exit probability, during the Asian crisis firms with liquidity needs were more likely to leave the market. On the intensive margin side, the number of workers, wage-bill, total income, and value-added were more negatively affected by this crisis in financially constrained firms.

Date: 2021-01
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
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:

Access Statistics for this paper

More papers in Working Papers Central Bank of Chile from Central Bank of Chile Contact information at EDIRC.
Bibliographic data for series maintained by Alvaro Castillo ().

Page updated 2022-09-24
Handle: RePEc:chb:bcchwp:897