Did the Euro Crisis Affect Non-Financial Firm Stock Prices Through a Financial or Trade Channel?

By Stijn Claessens, Hui Tong, Igor Esteban Zuccardi Huertas

September 1, 2011

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Stijn Claessens, Hui Tong, and Igor Esteban Zuccardi Huertas. Did the Euro Crisis Affect Non-Financial Firm Stock Prices Through a Financial or Trade Channel?, (USA: International Monetary Fund, 2011) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes through what channels the euro crisis has affected firm valuations globally. It examines stock price responses over the past year for 3045 non-financial firms in 16 countries to three key crisis events. Using pre-crisis benchmarks, it separates effects arising from changes in external financing and trade conditions and examines how bank and trade linkages propagated effects across borders. It finds that policy measures announced impacted financially-constrained firms more, particularly in creditor countries with greater bank exposure to peripheral euro countries. Trade linkages with peripheral countries also played a role, with euro exchange rate movements causing differential effects.

Subject: Asset prices, Banking, Exports, Financial crises, Financial institutions, Foreign banks, Foreign currency exposure, International trade, Money, Prices

Keywords: Asset prices, Bank exposure, Debtor country, East Asia, Euro crisis, Europe, Euro-zone firm, Exports, Exposure to PEC, Financial channel, Firm Size, Foreign banks, Foreign currency exposure, Global, Non-financial firms, Stock price, Trade channel, Trade exposure, WP

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/227
Stock No:

WPIEA2011227
ISBN:

9781463904951
ISSN:

1018-5941

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