Other publications may include books, quarterly reviews, annual reports and economic bulletins from the ECB, PhD theses and Danmarks Nationalbank’s policies.

Real Economic Consequences of Financial Crises - Part 2

The article throws light on the real economic consequences of banking crises in Denmark. We demonstrate a clear tendency, over the last 200 years, for economic downturns with banking crises to be deeper or longer than downturns without banking crises. Recent years' financial crisis has not been characterised by a general credit crunch, but the crisis gave rise to a considerable output loss, which is primarily attributable to the more general negative impact of the financial crisis on the real economy. In the years 2008-09, the probability of default was higher for firms with a "weak" bank than for similar firms with a "sound" bank. However, this should be viewed in light of the "weak" banks' overweight of "bad" customers. We find no indications that the return on assets for non-defaulting firms during the financial crisis was impacted by the "soundness" of their banks.