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Conference Paper
The effect of a banking crisis on bank-dependent borrowers
How does the banking sector?s financial health affect bank-dependent borrowers? performance? We use the exogenous shock to U.S. banking system during the Russian crisis of Fall 1998 as a natural experiment to separate the effect of borrower?s demand of credit from the bank?s ability to supply credit and estimate the effect of U.S. bank?s financial health on the U.S. borrower?s stock-market performance. In an event window of 16 days starting with the Russian sovereign-debt default and ending with the flight of capital from Brazil, a period characterized with significant adverse shocks to the ...