Acharya, V.V., Eisert, T., Eufinger, C. and Hirsch, C. (2018). Real Effects of the Sovereign Debt Crisis in Europe: Evidence from Syndicated Loans Review of Financial Studies, 31(8):2855--2896.


  • Affiliated author
  • Publication year
    2018
  • Journal
    Review of Financial Studies

We explore the causes of the credit crunch during the European sovereign debt crisis and its impact on the corporate policies of European firms. Our results show that value impairment in banks{\textquoteright} exposures to sovereign debt and the risk-shifting behavior of weakly capitalized banks reduced the probability of firms being granted new syndicated loans by up to 53%. This lending contraction depressed investment, employment, and sales growth of firms affiliated with affected banks. Our estimates based on firm-level data suggest that the credit crunch explains between 44% and 66% of the overall negative real effects suffered by European firms.