Credit Relationships and Business Bankruptcy during the Great Depression

• 成果类型: Article
• 署名作者: Hansen, Mary Eschelbach; Ziebarth, Nicolas L.
• 署名单位: American University; University of Iowa; National Bureau of Economic Research
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20150218
• 发表日期: 2017
• 页码: 228-255
• 关键词: reserve district border; monetary intervention; Financial crisis; Banking panics; distress; AMERICA; FIRMS; money; south; LAW

摘要

Credit relationships are sticky. Stickiness makes relationships beneficial to borrowers in times of their own distress but makes them potentially problematic when lenders themselves face hardship. To examine the role of credit relationships during a financial crisis, we exploit a natural experiment in Mississippi during the Great Depression that generated plausibly exogenous differences in financial distress for banks. Using new data drawn from the publications of the credit rating agency Dun & Bradstreet and from original bankruptcy filings, we show that financial distress increased business exit but did not increase the bankruptcy rate. Financial distress caused both banks and trade creditors to recalibrate their collections strategies, which is revealed by changes in the geographical distribution of the creditors of bankrupt businesses.