Working Papers present research work by both Danmarks Nationalbank’s employees and our partners. Working Papers are primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.
Bank-firm relationships and the performance of non-financial firms during the financial crisis 2008-09- microeconometric evidence from large-scale firm-level data
Utilising a unique data set with annual accounts from around 37,000 Danish non-financial firms spanning one and a half decade or so, we offer microeconometric evidence on bank-firm relationships and the performance of non-financial firms during the financial crisis 2008-09. Two major conclusions are drawn from the analysis. First, the probability of default during the financial crisis 2008-09 was significantly higher for firms with a “weak” bank than for comparable firms with a “sound” bank. Second, non-defaulting firms with a “weak” bank did not have a lower return on assets during the financial crisis 2008-09 than comparable firms with a “sound” bank. Taken together, these results may indicate the presence of heterogeneous effects of having a "weak" bank with significant negative effects on the economic performance for some firms but insignificant effects for the broad mass of firms.