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Agglomeration and Industry Spillover Effects in the Aftermath of a Credit Shock

Author

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  • José Jorge

    (Universidade do Porto, CEF.UP)

  • Joana Rocha

    (Universidade do Porto)

Abstract

This paper provides empirical evidence showing that industries >with intense strategic complementarities exhibit stronger sensitivity to economic shocks. The Portuguese credit crunch of 2009 represents a negative shock for nonfinancial firms, which has created negative spillover effects among firms. Corporate investment declines significantly in industries with strong strategic complementarities following the onset of the crisis, controlling for firm fixed effects, time-varying measures of financial constraints, and investment opportunities. Consistent with a causal effect, the decline is greatest for firms in industries with strong strategic complementarities. To address sample-selection concerns we consider several sample splits and apply a matching approach to find the best counterfactual, and confirm similar results.

Suggested Citation

  • José Jorge & Joana Rocha, 2020. "Agglomeration and Industry Spillover Effects in the Aftermath of a Credit Shock," International Journal of Central Banking, International Journal of Central Banking, vol. 16(3), pages 1-50, June.
    • Handle: RePEc:ijc:ijcjou:y:2020:q:2:a:1
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    References listed on IDEAS

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    Cited by:

    1. Laura Serra & Claudio Detotto & Pablo Juan & Marco Vannini, 2022. "Intersectoral and spatial spill-overs of firms’ bankruptcy in Spain," Letters in Spatial and Resource Sciences, Springer, vol. 15(2), pages 197-211, August.
    2. Diemo Dietrich & Uwe Vollmer, 2024. "Investment externalities, bank liquidity creation, and bank failures," Journal of Economics, Springer, vol. 141(2), pages 137-162, March.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G01 - Financial Economics - - General - - - Financial Crises
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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