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Bank distress and firms’ investment during the Great Recession - evidence from Ireland

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  • Mariana Spatareanu
  • Vlad Manole
  • Ali Kabiri

Abstract

This article investigates the impact of bank distress on firms’ performance using unique data during the Great Recession for Ireland. The results show that bank distress, measured as banks’ credit default swap spreads (CDS), has negatively and statistically significantly affected firms’ investment expenditures. Interestingly, firms with access to alternative sources of external finance are not impacted by bank distress. The results are robust to accounting for external finance dependence, demand and trade sensitivities, which affect firm performance and the demand for credit.

Suggested Citation

  • Mariana Spatareanu & Vlad Manole & Ali Kabiri, 2017. "Bank distress and firms’ investment during the Great Recession - evidence from Ireland," Applied Economics Letters, Taylor & Francis Journals, vol. 24(3), pages 143-147, February.
    • Handle: RePEc:taf:apeclt:v:24:y:2017:i:3:p:143-147
    DOI: 10.1080/13504851.2016.1170928
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    Cited by:

    1. Spatareanu, Mariana & Manole, Vlad & Kabiri, Ali, 2019. "Do bank liquidity shocks hamper firms’ innovation?," LSE Research Online Documents on Economics 116931, London School of Economics and Political Science, LSE Library.
    2. Spatareanu, Mariana & Manole, Vlad & Kabiri, Ali, 2019. "Do bank liquidity shocks hamper firms’ innovation?," International Journal of Industrial Organization, Elsevier, vol. 67(C).

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