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Business failures in New England

Author

Listed:
  • William James Adams
  • Joe Peek
  • Eric Rosengren

Abstract

During the 1980s, the New England economy prospered relative to the nation as a whole, with lower unemployment rates, more rapidly rising real estate prices, and lower rates of business failures. As the economic tide turned against New England at the end of the decade, the rate of business failures soared, in absolute terms as well as relative to nationwide statistics. This recent wave of business failures appears to have been far in excess of that attributable to the decline in New England economic activity. Moreoever, it has undesirable implications for the regional economy and can be expected to slow economic recovery in the area. The authors explore several explanations for the increase in business failures, including employment losses, industry mix effects, and credit availability. Their findings suggest that difficulties in the banking sector have contributed significantly to the very high rate of business failures in New England.

Suggested Citation

  • William James Adams & Joe Peek & Eric Rosengren, 1993. "Business failures in New England," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 33-44.
    • Handle: RePEc:fip:fedbne:y:1993:i:nov:p:33-44
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    File URL: http://www.bostonfed.org/economic/neer/neer1993/neer693c.pdf
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    References listed on IDEAS

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    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. Gregory E. Elliehausen & John D. Wolken, 1990. "Banking markets and the use of financial services by small and medium- sized businesses," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Oct, pages 801-817.
    3. Herbert L. Baer & John N. McElravey, 1992. "Capital adequacy and the growth of U.S. banks," Working Paper Series, Issues in Financial Regulation 92-11, Federal Reserve Bank of Chicago.
    4. R. Dan Brumbaugh & Robert E. Litan, 1991. "Ignoring Economics In Dealing With The Savings And Loan And Commercial Banking Crisis," Contemporary Economic Policy, Western Economic Association International, vol. 9(1), pages 36-53, January.
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    Cited by:

    1. repec:zbw:bofrdp:1995_028 is not listed on IDEAS
    2. Takala, Kari & Virén, Matti, 1995. "Bankruptcies, indebtedness and the credit cruch," Bank of Finland Research Discussion Papers 28/1995, Bank of Finland.
    3. Takala, Kari & Virén, Matti, 1995. "Bankruptcies, indebtedness and the credit cruch," Research Discussion Papers 28/1995, Bank of Finland.
    4. Kaen, Fred R. & Michalsen, Dag, 1997. "The effects of the Norwegian banking crisis on Norwegian equities," Journal of Multinational Financial Management, Elsevier, vol. 7(2), pages 83-111, June.

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    Keywords

    Business failures; New England;

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