Real Effects of the Sovereign Debt Crisis in Europe: Evidence from Syndicated Loans

59 Pages Posted: 1 Jun 2015 Last revised: 5 Feb 2018

Viral V. Acharya

New York University - Leonard N. Stern School of Business; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); New York University (NYU) - Department of Finance

Tim Eisert

Erasmus University Rotterdam (EUR)

Christian Eufinger

IESE Business School

Christian W. Hirsch

University of Frankfurt; Goethe University Frankfurt - Research Center SAFE

Multiple version iconThere are 2 versions of this paper

Date Written: April 5, 2016

Abstract

We explore the impact of the credit crunch that followed the European debt crisis on the corporate policies of European firms. We show that banks' exposures to impaired sovereign debt and the risk-shifting behavior of undercapitalized banks contributed significantly to the severity of the crisis. In particular, we present firm-level evidence showing that the lending contraction of banks affected by the crisis depressed the investment, job creation, and sales growth of firms affliated with these banks. Our estimates suggest that the credit crunch explains between one-fifth and one-half of the overall negative real effects suffered by European borrowing firms.

JEL Classification: G01, G21, G28, E44

Suggested Citation

Acharya, Viral V. and Eisert, Tim and Eufinger, Christian and Hirsch, Christian W., Real Effects of the Sovereign Debt Crisis in Europe: Evidence from Syndicated Loans (April 5, 2016). Available at SSRN: https://ssrn.com/abstract=2612855 or http://dx.doi.org/10.2139/ssrn.2612855

Viral V. Acharya

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

HOME PAGE: http://pages.stern.nyu.edu/~sternfin/vacharya/public_html/~vacharya.htm

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

New York University (NYU) - Department of Finance

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

Tim Eisert (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Christian Eufinger

IESE Business School ( email )

Avinguda de Pearson, 21
Barcelona, 08034
Spain

Christian W. Hirsch

University of Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
+49 69 798 33704 (Phone)
+49 69 798 33901 (Fax)

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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