The Long-Run Real Effects of Banking Crises: Firm-Level Investment Dynamics and the Role of Wage Rigidity

I study the long-run effects of credit market disruptions on real firm outcomes and how these depend nominal wage rigidity at level. Exploiting variation in firms' refinancing needs during global financial crisis, trace out investment growth trajectories response to a supply shock. Financially shocked firms exhibit temporary gap for two years, resulting persistent accumulated six years after crisis. Shocked with rigid wages significantly steeper drop an additional relative flexible wages.