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On the Real Effect of Financial Pressure: Evidence From Firm‐Level Employment During the Euro‐Area Crisis

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  • Filipa Da Silva Fernandes
  • Alexandros Kontonikas
  • Serafeim Tsoukas

Abstract

Using a large panel of mainly unquoted euro‐area firms over the period 2003–2011, this paper examines the impact of financial pressure on firms’ employment. The analysis finds evidence that financial pressure negatively affects firms’ employment decisions. This effect is stronger during the euro area‐crisis (2010–2011), especially for firms in the periphery compared to their counterparts in non‐periphery European economies. When we introduce firm‐level heterogeneity, we show that financial pressure appears to be both statistically and quantitatively more important for bank‐dependent, small and privately held firms operating in periphery economies during the crisis.

Suggested Citation

  • Filipa Da Silva Fernandes & Alexandros Kontonikas & Serafeim Tsoukas, 2019. "On the Real Effect of Financial Pressure: Evidence From Firm‐Level Employment During the Euro‐Area Crisis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(3), pages 617-646, June.
    • Handle: RePEc:bla:obuest:v:81:y:2019:i:3:p:617-646
    DOI: 10.1111/obes.12278
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    Cited by:

    1. Berger, Allen N. & Molyneux, Phil & Wilson, John O.S., 2020. "Banks and the real economy: An assessment of the research," Journal of Corporate Finance, Elsevier, vol. 62(C).
    2. José Manuel Mansilla-Fernández & Juliette Milgram-Baleix, 2023. "Working capital management, financial constraints and exports: evidence from European and US manufacturers," Empirical Economics, Springer, vol. 64(4), pages 1769-1810, April.

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