Corporate Financial Frictions and Employee Mental Health

65 Pages Posted: 15 Mar 2021 Last revised: 17 Feb 2023

See all articles by Daniel Karpati

Daniel Karpati

Erasmus University Rotterdam (EUR) - Department of Business Economics

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: August 17, 2021


This paper argues that corporate financial frictions can have an adverse effect on employee mental health, an important determinant of employee productivity. To identify the causal effects of financial frictions, we exploit variation in firms’ need to refinance their long-term debt in 2008, a period when refinancing became more difficult due to the credit crunch. Using administrative microdata, we find that antidepressant use grows significantly more among employees of firms in higher need of debt refinancing. Much of this effect occurs at employees keeping their jobs, pointing to decreased perceptions of job security as a transmission channel.

Funding Information: The research for this publication was partly funded by the Open Data Infrastructure for Social Science and Economic Innovations (ODISSEI) in the Netherlands (

Conflict of Interests: MISSING

Keywords: financial crisis, credit supply, mental health, job insecurity, credit supply, job loss, depression, anti-depressants

JEL Classification: G01, G21, I12

Suggested Citation

Karpati, Daniel and Renneboog, Luc, Corporate Financial Frictions and Employee Mental Health (August 17, 2021). CentER Discussion Paper Nr. 2021-003, European Corporate Governance Institute – Finance Working Paper No. 796/2021, Available at SSRN: or

Daniel Karpati

Erasmus University Rotterdam (EUR) - Department of Business Economics ( email )


Luc Renneboog (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE

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