EconPapers    
Economics at your fingertips  
 

The Economic Costs of Financial Distress

Claudia Custodio, Miguel Ferreira and Emilia Garcia-Appendini ()

No 13862, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We estimate the economic costs of financial distress by exploiting cross-supplier variation in real estate assets and leverage, and the timing of real estate shocks. We show that for the same client buying from different suppliers, its purchases from suppliers in financial distress decline by an additional 10% following a drop in local real estate prices. The effect is more pronounced in more competitive industries, manufacturing and durable goods industries, for producers of less-specific goods, and when the costs of switching suppliers are low. Our results suggest that the indirect costs of financial distress are economically important.

Keywords: Economic distress; financial distress; Real estate prices; Supply Chain (search for similar items in EconPapers)
JEL-codes: G31 G32 G33 L11 L14 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-ure
References: View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=13862 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

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: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13862

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=13862

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2022-07-04
Handle: RePEc:cpr:ceprdp:13862