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Spare Tire? Stock Markets, Banking Crises, and Economic Recoveries (2015)
BibTeX
@MISC{Levine15sparetire?,
author = {Ross Levine and Chen Lin and Wensi Xie and Franklin Allen and Thorsten Beck and Daniel Berkowitz and David Chor and Craig Doidge and Erik Gilje},
title = {Spare Tire? Stock Markets, Banking Crises, and Economic Recoveries},
year = {2015}
}
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Abstract
Do stock markets act as a “spare tire ” during banking crises, providing an alternative corporate financing channel and mitigating the economic severity of crises? Using firm-level data in 36 countries from 1990 through 2011, we find that the adverse consequences of banking crises on equity issuances, firm profitability, employment, and investment efficiency are smaller in countries with stronger shareholder protection laws. These findings are not explained by the development of stock markets or financial institutions prior to the crises, the severity of the banking crisis, or overall economic, legal, and institutional development.
