Limited access to finance increased business exits in Great Recession – St Louis Fed
Illiquidity may have played a greater role than insolvency in business exits, researchers find
Limited short-term access to finance may have played a significant role in businesses exiting the market during the Great Recession, Federal Reserve Bank of St Louis researchers find.
In an economic letter, Fernando Leibovici and Matthew Famiglietti compare industry-level delinquency rates and industry-level exit rates between 2007 and 2011.
They find a high correlation between delinquency rates and firm exits, in that industries with many distressed firms had higher exit rates.
“While there
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