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Real Effects of the 2007-08 Financial Crisis around the World

By Hui Tong (imf

Abstract

This paper proposes a simple framework (a) to quantify the importance of the finance shock to non-financial firms in 45 countries by exploring cross-firm heterogeneity in dependence on external finance for working capital and investment, and (b) to study whether and how the type of financial system, the nature of monetary and exchange rate regime, and the magnitude of pre-crisis credit expansion affect the transmission of the finance shocks internationally by exploring cross-country heterogeneity in these dimensions. We find that stock price performance was worse for firms with larger ex ante sensitivity to shocks to external finance, particularly in countries with rapid pre-crisis credit expansion

Topics: Key words, financial crisis, spillover, liquidity constraint JEL codes, G2
Year: 2013
OAI identifier: oai:CiteSeerX.psu:10.1.1.353.4319
Provided by: CiteSeerX
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