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Type	Working Paper
Scope	Discipline-based scholarship
Title	Small firms and domestic bank dependence in Europe's Great Recession
Organization Unit	Department of Economics (Florian Scheuer)
Authors	Mathias Hoffmann Egor Maslov Bent E Sørensen
Language	English
Institution	CESifo
Series Name	CESifo Working Papers
Number	7897
ISSN	2364‐1428
Number of Pages	52
Date	2019
Abstract Text	Small businesses (SMEs) depend on banks for credit. We show that the severity of the Eurozone crisis was worse in countries where firms borrowed more from domestic banks (“domestic bank dependence”) than in countries where firms borrowed more from international banks. Eurozone banking integration in the years 2000–2008 mainly involved cross-border lending between banks while foreign banks’ lending to the real sector stayed flat. Hence, SMEs remained dependent on domestic banks and were vulnerable to global banking shocks. We confirm, using a calibrated quantitative model, that domestic bank dependence makes sectors and countries with many SMEs vulnerable to global banking shocks.
Official URL	https://www.cesifo.org/en/publikationen/2019/working-paper/small-firms-and-domestic-bank-dependence-europes-great-recession
Related URLs	https://cama.crawford.anu.edu.au/publication/cama-working-paper-series/15322/small-firms-and-domestic-bank-dependence-europes-great https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13691 https://ec.europa.eu/info/publications/economy-finance/small-firms-and-domestic-bank-dependence-europes-great-recession_en
Other Identification Number	merlin-id:18378
PDF File	Download from ZORA
Export	BibTeX EP3 XML (ZORA)
Keywords	Banking integration, domestic bank dependence, international transmission, small and medium enterprises, sme access to finance
Additional Information	Also appeared as CAMA WP 76/2019 and as CESifo-WP 7897, earlier versions as CEPR-DP 13691 and as European Economy Discussion Paper 12 (see related URLs).