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Riding out of a financial crisis: The joint effect of trust and corporate ownership

Mario Daniele Amore and Mircea Epure ()

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We study how generalized trust shapes the ability of firms with different ownership forms to obtain trade financing and perform during a financial crisis. Exploiting geographic variations in trust across Italian regions and the occurrence of the 2008-09 financial crisis in a difference-indifferences setting, we show that generalized trust makes family firms less able to obtain trade financing during the crisis. This finding maps into performance results: trust alleviates the negative effect of a crisis for non-family firms, while it aggravates the negative effect for family firms. This latter result depends crucially on a firm’s corporate governance: trust does not harm family firms whose board is open to non-family directors. Collectively, our findings illustrate how culture interacts with corporate attributes in shaping a firm’s prospects.

Keywords: trust; trade financing; Family firms; financial crisis; performance (search for similar items in EconPapers)
JEL-codes: G32 G34 Z10 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-cfn and nep-soc
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Working Paper: Riding Out of a Financial Crisis: The Joint Effect of Trust and Corporate Ownership (2020) Downloads
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