Scandinavian Working Papers in Economics
Working Paper Series,
Sveriges Riksbank (Central Bank of Sweden)
No 359: Diversication Advantages During the Global Financial Crisis
Mats Levander ()
Additional contact information
Mats Levander: Financial Stability Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
Abstract: In this paper, I investigate whether being part of a business group mitigated the effects of the global financial crisis for Swedish firms. The crisis is used as an exogenous shock to firms' external financing. The investments made by business group firms are compared to those made by standalone firms. I find that being part of a business group had a mitigating effect on the impact of the crisis on firm investments. Firms that were part of a business group reduced their investments by significantly less than standalone rms. These differences are driven by a diversification effect among business group firms due to the use of internal capital markets and easier access to external financing. I present evidence of increased internal capital market activity during the crisis. Finally, my results suggest that business group firms profitability increased relative to the profitability of standalone firms after the crisis.
Keywords: Financial crisis; firm investment; business Group; internal capital markets; external financing constraints
50 pages, November 1, 2018
Full text files
no.-359-diversicatio...financial-crisis.pdfFull text
Questions (including download problems) about the papers in this series should be directed to Lena Löfgren ()
Report other problems with accessing this service to Sune Karlsson ().
This page generated on 2024-02-05 17:13:28.