Abstract

http://ssrn.com/abstract=1930819
 
 

References (34)



 


 



Do Phoenix Miracles Exist? Firm-Level Evidence from Financial Crises


Meghana Ayyagari


George Washington University - School of Business

Asli Demirgüç-Kunt


World Bank - Financial and Private Sector Development; World Bank

Vojislav Maksimovic


University of Maryland - Robert H. Smith School of Business

September 1, 2011

World Bank Policy Research Working Paper No. 5799

Abstract:     
This paper provides empirical evidence on firm recoveries from financial system collapses in developing countries (systemic sudden stops episodes), and compares them with the experience in the United States in the 2008 financial crisis. Prior research found that economies recover from systemic sudden stop episodes before the financial sector. These recoveries are called Phoenix miracles, and the research questioned the role of the financial system in recovery. Although an average of the macro data across a sample of systemic sudden stop episodes over the 1990s appears consistent with the notion of Phoenix recoveries, closer inspection reveals heterogeneity of responses across the countries, with only a few countries fitting the pattern. Micro data show that across countries, only a small fraction (less than 31 percent) of firms follow a pattern of recovery in sales without a recovery in external credit, and even these firms have access to external sources of cash. The experience of firms in the United States during the 2008 financial crisis also suggests no evidence of credit-less recoveries. An examination of the dynamics of firms' financing, investment and payout policies during recovery periods shows that far from being constrained, the firms in the sample are able to access long-term financing, issue equity, and significantly expand their cash holdings.

Number of Pages in PDF File: 65

Keywords: Debt Markets, Access to Finance, Bankruptcy and Resolution of Financial Distress, Emerging Markets, Economic Theory & Research

working papers series





Download This Paper

Date posted: September 21, 2011  

Suggested Citation

Ayyagari, Meghana and Demirgüç-Kunt, Asli and Maksimovic, Vojislav, Do Phoenix Miracles Exist? Firm-Level Evidence from Financial Crises (September 1, 2011). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2011. Available at SSRN: http://ssrn.com/abstract=1930819

Contact Information

Meghana Ayyagari (Contact Author)
George Washington University - School of Business ( email )
Washington, DC 20052
United States
Asli Demirgüç-Kunt
World Bank - Financial and Private Sector Development ( email )
United States
202-473-7479 (Phone)
202-522-1155 (Fax)
HOME PAGE: http://econ.worldbank.org/staff/ademirguckunt/
World Bank ( email )
1818 H Street, NW
Washington, DC 20433
United States
Vojislav Maksimovic
University of Maryland - Robert H. Smith School of Business ( email )
Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2125 (Phone)
301-314-9157 (Fax)
HOME PAGE: http://www.rhsmith.umd.edu/finance/vmax/
Feedback to SSRN


Paper statistics
Abstract Views: 412
Downloads: 90
Download Rank: 173,208
References:  34

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.250 seconds