Financial Crises, Financial Dependence, and Industry Growth (original) (raw)

Laeven, Klingebiel, and Kroszner investigate the link financial systems. They hypothesize that the deepening of ke-LW,een financial crises anA inAustr y g rowth. Thley the financial systemL allows sectors dependent on external analyze data from 19 industrial and developing countries finance to obtain relatively more external funding in that have experienced financiat crises during tne past 30 normal perioas, so a crisis in sucn counrries wouia nave a years to investigate how financial crises affect sectors disproportionately negative effect on externally dependent on external sources of finance. Specifically, dependent sectors. In contrast, since externally the authors examine whether the impact of a financial dependent firms tend to obtain relatively less external crisis on externally dependent sectors varies with the financing in shallower financial systems (and hence have depth of the financial system. They find that sectors relatively lower growth rates in such countries during highly dependent on external finance tend to experience normal times), a crisis in such countries has less of a a grpntpr cnntrnction of valiuie addelped tduring n rrisis in dispnronrtinnntelv neantive effect on the grnwth of deeper financial systems than in countries with shallower externally dependent sectors.