Demand Collapse or Credit Crunch to Firms? Evidence from the World Bank's Financial Crisis Survey in Eastern Europe
While there is a consensus that the 2008-2009 crisis was triggered by financial market disruptions in the United States, there is little agreement on whether the transmission of the crisis and the subsequent prolonged recession are due to credit fa...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2013/10/18372136/demand-collapse-or-credit-crunch-firms-evidence-world-banks-financial-crisis-survey-eastern-europe http://hdl.handle.net/10986/16865 |
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okr-10986-168652021-04-23T14:03:32Z Demand Collapse or Credit Crunch to Firms? Evidence from the World Bank's Financial Crisis Survey in Eastern Europe Nguyen, Ha Qian, Rong ACCESS TO CREDIT ACCESS TO FINANCE ADVERSE EFFECT BALANCE SHEET BALANCE SHEETS BANK LIQUIDITY BANKRUPTCY BANKS BUSINESS ENVIRONMENT BUSINESS ESTABLISHMENTS CAPITAL EXPENDITURES CASH FLOW CASH FLOWS CONSUMERS CREDIT CRUNCH CREDIT CRUNCHES CREDIT MARKET CREDIT NEEDS CREDIT PROBLEM CREDIT RELATIONSHIP DEBT DEMAND CURVE DEMAND DECLINES DEVELOPMENT POLICY EARNINGS ECONOMETRIC ANALYSIS ECONOMIC CRISIS ECONOMIC POLICY EMERGING MARKET EMPLOYMENT EXPENDITURE EXPENDITURES EXPORTS EXTERNAL FINANCE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKET FINANCIAL NEED FINANCIAL RESOURCES FIRM SIZE FIRM SIZES FIRMS FIRST CREDIT FISCAL POLICIES FIXED ASSETS HOUSEHOLDS INTERNATIONAL BANK LACK OF ACCESS LENDERS LIQUIDITY LOAN LOAN GUARANTEES MACROECONOMICS MORTGAGE POLITICAL ECONOMY PRICE DECLINES PRODUCTIVITY RECESSION RECESSIONS REGULATORY POLICY RETAIL RETAINED EARNINGS SALE SALES SMALL FIRM SMALL FIRMS STOCK PRICES STOCKS SUPPLIERS TOTAL OUTPUT WEALTH WORKING CAPITAL While there is a consensus that the 2008-2009 crisis was triggered by financial market disruptions in the United States, there is little agreement on whether the transmission of the crisis and the subsequent prolonged recession are due to credit factors or to a collapse of demand for goods and services. This paper assesses whether the primary effect of the global crisis on Eastern European firms took the form of an adverse demand shock or a credit crunch. Using a unique firm survey conducted by the World Bank in six Eastern European countries during the 2008-2009 financial crisis, the paper shows that the drop in demand for firms' products and services was overwhelmingly reported as the most damaging adverse effect of the crisis. Other "usual suspects," such as rising debt or reduced access to credit, are reported as minor. The paper also finds that the changes in firms' sales and installed capacity are significantly and robustly correlated with the demand sensitivity of the sector in which the firms operate. However, they are not robustly correlated with various proxies for firms' credit needs. 2014-02-04T17:02:44Z 2014-02-04T17:02:44Z 2013-10 http://documents.worldbank.org/curated/en/2013/10/18372136/demand-collapse-or-credit-crunch-firms-evidence-world-banks-financial-crisis-survey-eastern-europe http://hdl.handle.net/10986/16865 English en_US Policy Research Working Paper;No. 6651 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Europe and Central Asia Eastern Europe |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO CREDIT ACCESS TO FINANCE ADVERSE EFFECT BALANCE SHEET BALANCE SHEETS BANK LIQUIDITY BANKRUPTCY BANKS BUSINESS ENVIRONMENT BUSINESS ESTABLISHMENTS CAPITAL EXPENDITURES CASH FLOW CASH FLOWS CONSUMERS CREDIT CRUNCH CREDIT CRUNCHES CREDIT MARKET CREDIT NEEDS CREDIT PROBLEM CREDIT RELATIONSHIP DEBT DEMAND CURVE DEMAND DECLINES DEVELOPMENT POLICY EARNINGS ECONOMETRIC ANALYSIS ECONOMIC CRISIS ECONOMIC POLICY EMERGING MARKET EMPLOYMENT EXPENDITURE EXPENDITURES EXPORTS EXTERNAL FINANCE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKET FINANCIAL NEED FINANCIAL RESOURCES FIRM SIZE FIRM SIZES FIRMS FIRST CREDIT FISCAL POLICIES FIXED ASSETS HOUSEHOLDS INTERNATIONAL BANK LACK OF ACCESS LENDERS LIQUIDITY LOAN LOAN GUARANTEES MACROECONOMICS MORTGAGE POLITICAL ECONOMY PRICE DECLINES PRODUCTIVITY RECESSION RECESSIONS REGULATORY POLICY RETAIL RETAINED EARNINGS SALE SALES SMALL FIRM SMALL FIRMS STOCK PRICES STOCKS SUPPLIERS TOTAL OUTPUT WEALTH WORKING CAPITAL |
| spellingShingle |
ACCESS TO CREDIT ACCESS TO FINANCE ADVERSE EFFECT BALANCE SHEET BALANCE SHEETS BANK LIQUIDITY BANKRUPTCY BANKS BUSINESS ENVIRONMENT BUSINESS ESTABLISHMENTS CAPITAL EXPENDITURES CASH FLOW CASH FLOWS CONSUMERS CREDIT CRUNCH CREDIT CRUNCHES CREDIT MARKET CREDIT NEEDS CREDIT PROBLEM CREDIT RELATIONSHIP DEBT DEMAND CURVE DEMAND DECLINES DEVELOPMENT POLICY EARNINGS ECONOMETRIC ANALYSIS ECONOMIC CRISIS ECONOMIC POLICY EMERGING MARKET EMPLOYMENT EXPENDITURE EXPENDITURES EXPORTS EXTERNAL FINANCE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKET FINANCIAL NEED FINANCIAL RESOURCES FIRM SIZE FIRM SIZES FIRMS FIRST CREDIT FISCAL POLICIES FIXED ASSETS HOUSEHOLDS INTERNATIONAL BANK LACK OF ACCESS LENDERS LIQUIDITY LOAN LOAN GUARANTEES MACROECONOMICS MORTGAGE POLITICAL ECONOMY PRICE DECLINES PRODUCTIVITY RECESSION RECESSIONS REGULATORY POLICY RETAIL RETAINED EARNINGS SALE SALES SMALL FIRM SMALL FIRMS STOCK PRICES STOCKS SUPPLIERS TOTAL OUTPUT WEALTH WORKING CAPITAL Nguyen, Ha Qian, Rong Demand Collapse or Credit Crunch to Firms? Evidence from the World Bank's Financial Crisis Survey in Eastern Europe |
| geographic_facet |
Europe and Central Asia Eastern Europe |
| relation |
Policy Research Working Paper;No. 6651 |
| description |
While there is a consensus that the
2008-2009 crisis was triggered by financial market
disruptions in the United States, there is little agreement
on whether the transmission of the crisis and the subsequent
prolonged recession are due to credit factors or to a
collapse of demand for goods and services. This paper
assesses whether the primary effect of the global crisis on
Eastern European firms took the form of an adverse demand
shock or a credit crunch. Using a unique firm survey
conducted by the World Bank in six Eastern European
countries during the 2008-2009 financial crisis, the paper
shows that the drop in demand for firms' products and
services was overwhelmingly reported as the most damaging
adverse effect of the crisis. Other "usual
suspects," such as rising debt or reduced access to
credit, are reported as minor. The paper also finds that the
changes in firms' sales and installed capacity are
significantly and robustly correlated with the demand
sensitivity of the sector in which the firms operate.
However, they are not robustly correlated with various
proxies for firms' credit needs. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Nguyen, Ha Qian, Rong |
| author_facet |
Nguyen, Ha Qian, Rong |
| author_sort |
Nguyen, Ha |
| title |
Demand Collapse or Credit Crunch to Firms? Evidence from the World Bank's Financial Crisis Survey in Eastern Europe |
| title_short |
Demand Collapse or Credit Crunch to Firms? Evidence from the World Bank's Financial Crisis Survey in Eastern Europe |
| title_full |
Demand Collapse or Credit Crunch to Firms? Evidence from the World Bank's Financial Crisis Survey in Eastern Europe |
| title_fullStr |
Demand Collapse or Credit Crunch to Firms? Evidence from the World Bank's Financial Crisis Survey in Eastern Europe |
| title_full_unstemmed |
Demand Collapse or Credit Crunch to Firms? Evidence from the World Bank's Financial Crisis Survey in Eastern Europe |
| title_sort |
demand collapse or credit crunch to firms? evidence from the world bank's financial crisis survey in eastern europe |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2013/10/18372136/demand-collapse-or-credit-crunch-firms-evidence-world-banks-financial-crisis-survey-eastern-europe http://hdl.handle.net/10986/16865 |
| _version_ |
1764434739417055232 |