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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title The cleansing effect of banking crises
Organization Unit
  • Reint Gropp
  • Steven Ongena
  • Jörg Rocholl
  • Vahid Saadi
Item Subtype Original Work
Refereed Yes
Status Published in final form
  • English
Journal Title Economic Inquiry
Publisher Wiley-Blackwell Publishing, Inc.
Geographical Reach international
ISSN 0095-2583
Volume 60
Number 3
Page Range 1186 - 1213
Date 2022
Abstract Text We assess the cleansing effects of the 2008–2009 financial crisis. U.S. regions with higher levels of supervisory forbearance on distressed banks see less restructuring in the real sector: fewer establishments, firms, and jobs are lost when more distressed banks remain in business. In these regions, the banking sector has been less healthy for several years after the crisis. Regions with less forbearance experience higher productivity growth after the crisis with more firm entries, job creation, and employment, wages, patents, and output growth. Forbearance is greater for state-chartered banks and in regions with weaker banking competition and more independent banks.
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Digital Object Identifier 10.1111/ecin.13069
Other Identification Number merlin-id:22121
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