Should-Read: Mary Eschelbach Hansen and Nicolas L. Ziebarth: Credit Relationships and Business Bankruptcy during the Great Depression

Should-Read: Mary Eschelbach Hansen and Nicolas L. Ziebarth: Credit Relationships and Business Bankruptcy during the Great Depression: “Stickiness makes relationships beneficial to borrowers in times of their own distress but makes them potentially problematic when lenders themselves face hardship… http://pubs.aeaweb.org/doi/pdfplus/10.1257/mac.20150218

…We exploit a natural experiment in Mississippi during the Great Depression that generated plausibly exogenous differences in financial distress for banks… Dun & Bradstreet… original bankruptcy filings… financial distress increased business exit but did not increase the bankruptcy rate… caused both banks and trade creditors to recalibrate their collections strategies…