IDEAS home Printed from https://ideas.repec.org/a/fip/fednci/y2011ijulynv.17no.4.html
   My bibliography  Save this article

Why small businesses were hit harder by the recent recession

Author

Listed:

Abstract

Although both large and small businesses felt the sting of job losses during the 2007-09 downturn, small firms experienced disproportionate declines. A study of the recession?s employment effect on small firms suggests that poor sales and economic uncertainty were the main reasons for their weak performance and sluggish recovery?problems that affected large firms too, but to a lesser degree. Although a tightened credit supply constrained some small firms, weak consumer demand for the firms? products and services was a more pressing factor, reducing revenues and dampening new investment spending.

Suggested Citation

  • Anna Cororaton & Sagiri Kitao & Sergiu Laiu & Ayşegül Şahin, 2011. "Why small businesses were hit harder by the recent recession," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 17(July).
    • Handle: RePEc:fip:fednci:y:2011:i:july:n:v.17no.4
    as

    Download full text from publisher

    File URL: https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci17-4.html
    Download Restriction: no
    File URL: https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci17-4.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mark Gertler & Simon Gilchrist, 1994. "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 309-340.
    2. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2010. "Who Creates Jobs? Small vs. Large vs. Young," Working Papers 10-17, Center for Economic Studies, U.S. Census Bureau.
    3. Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1996. "The Financial Accelerator and the Flight to Quality," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 1-15, February.
    4. David A. Brauer & Charles Steindel, 1994. "Credit supply constraints on business activity, excluding construction," Monograph, Federal Reserve Bank of New York, number 1994cscobe.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fernández-Villaverde, Jesús & Mandelman, Federico & Yu, Yang & Zanetti, Francesco, 2021. "The “Matthew effect” and market concentration: Search complementarities and monopsony power," Journal of Monetary Economics, Elsevier, vol. 121(C), pages 62-90.
    2. Jung, Hyejin & Hwang, JungTae & Kim, Byung-Keun, 2018. "Does R&D investment increase SME survival during a recession?," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 190-198.
    3. Clymo, AJ, 2017. "Heterogeneous Firms, Wages, and the Effects of Financial Crises," Economics Discussion Papers 20572, University of Essex, Department of Economics.
    4. Çağlar Hamarat & Daniel Broby, 2022. "Regulatory constraint and small business lending: do innovative peer-to-peer lenders have an advantage?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-25, December.
    5. Kudlyak, Marianna & Sánchez, Juan M., 2017. "Revisiting the behavior of small and large firms during the 2008 financial crisis," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 48-69.
    6. Christopher Behrer & Colleen Kamen, 2012. "Navigating uncertainty and growing jobs: considering small employer firm resilience during challenging economic times," Community Development Working Paper 2012-06, Federal Reserve Bank of San Francisco.
    7. Sedláček, Petr, 2020. "Lost generations of firms and aggregate labor market dynamics," Journal of Monetary Economics, Elsevier, vol. 111(C), pages 16-31.
    8. Lai, Yanqing & Saridakis, George & Blackburn, Robert & Johnstone, Stewart, 2016. "Are the HR responses of small firms different from large firms in times of recession?," Journal of Business Venturing, Elsevier, vol. 31(1), pages 113-131.
    9. Sung-Eun Yu, 2017. "The Behavior of Small and Large Firms during Business Cycle Episodes and during Monetary Policy Episodes: A Comparison of Earlier and Recent Periods," Working Paper Series, Department of Economics, University of Utah 2017_05, University of Utah, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Valérie Oheix & Dorothée Rivaud-Danset, 2009. "Why do firms borrow on a short-term basis ? Evidence from European countries," Working Papers hal-04140880, HAL.
    2. Duygan-Bump, Burcu & Levkov, Alexey & Montoriol-Garriga, Judit, 2015. "Financing constraints and unemployment: Evidence from the Great Recession," Journal of Monetary Economics, Elsevier, vol. 75(C), pages 89-105.
    3. Mr. Yungsan Kim & Woon Gyu Choi, 2001. "Has Inventory Investment Been Liquidity-Constrained? Evidence From U.S. Panel Data," IMF Working Papers 2001/122, International Monetary Fund.
    4. Giuseppe Cinquegrana, 2014. "Effetti differenziali delle politiche monetarie sugli investimenti delle imprese industriali italiane: un?analisi con metodologia panel," RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO, FrancoAngeli Editore, vol. 2014(3), pages 40-78.
    5. Peydró, José-Luis & Jasova, Martina & Mendicino, Caterina & Panetti, Ettore & Supera, Dominik, 2021. "Monetary Policy, Labor Income Redistribution and the Credit Channel: Evidence from Matched Employer-Employee and Credit Registe," CEPR Discussion Papers 16549, C.E.P.R. Discussion Papers.
    6. Yang, Xiaolou, 2011. "The role of trade credit in the recent subprime financial crisis," Journal of Economics and Business, Elsevier, vol. 63(5), pages 517-529, September.
    7. Demir, Firat, 2010. "Exchange Rate Volatility and Employment Growth in Developing Countries: Evidence from Turkey," World Development, Elsevier, vol. 38(8), pages 1127-1140, August.
    8. Ravn, Søren Hove, 2014. "Asymmetric monetary policy towards the stock market: A DSGE approach," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 24-41.
    9. Aadland, David, 2005. "Detrending time-aggregated data," Economics Letters, Elsevier, vol. 89(3), pages 287-293, December.
    10. Alexandros Kontonikas & Alexandros Kostakis, 2013. "On Monetary Policy and Stock Market Anomalies," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 40(7-8), pages 1009-1042, September.
    11. Paul Mizen & Cihan Yalcin, 2006. "Monetary Policy, Corporate Financial Composition and Real Activity," CESifo Economic Studies, CESifo Group, vol. 52(1), pages 177-213, March.
    12. Jiménez, Gabriel & Ongena, Steven & Peydró, José-Luis & Saurina, Jesús, 2012. "Credit Supply and Monetary Policy: Identifying the Bank Balance-Sheet Channel with Loan Applications," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 102(5), pages 2301-2326.
    13. Beck, Thorsten & Lundberg, Mattias & Majnoni, Giovanni, 2006. "Financial intermediary development and growth volatility: Do intermediaries dampen or magnify shocks?," Journal of International Money and Finance, Elsevier, vol. 25(7), pages 1146-1167, November.
    14. Annalisa Ferrando & Alexander Popov & Gregory F. Udell, 2019. "Do SMEs Benefit from Unconventional Monetary Policy and How? Microevidence from the Eurozone," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(4), pages 895-928, June.
    15. Sajjad Zaheer & Steven Ongena & Sweder J.G. van Wijnbergen, 2013. "The Transmission of Monetary Policy Through Conventional and Islamic Banks," International Journal of Central Banking, International Journal of Central Banking, vol. 9(4), pages 175-224, December.
    16. Lamont, Owen & Polk, Christopher & Saa-Requejo, Jesus, 2001. "Financial Constraints and Stock Returns," The Review of Financial Studies, Society for Financial Studies, vol. 14(2), pages 529-554.
    17. Cieply Sylvie, 2001. "The Radical Change of French Firms’ Financial Characteristics. Macroeconomic Consequences and Lessons for Political Economics / Die französische Finanzrevolution. Die Folgen für die Finanzstruktur der," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 221(5-6), pages 556-576, October.
    18. Gaurav Gupta & Jitendra Mahakud & Vivek Verma, 2020. "CEO's education and investment–cash flow sensitivity: an empirical investigation," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 17(4), pages 589-618, December.
    19. Benard Kipyegon Kirui & Nelson H.W. Wawire, 2018. "Measures of Financial Constraints in Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 8(1), pages 217-231.
    20. Arturo Galindo & Alejandro Micco, 2005. "Creditor Protection and Credit Volatility," Research Department Publications 4401, Inter-American Development Bank, Research Department.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednci:y:2011:i:july:n:v.17no.4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.