The impact of the financial distress of 2007-2009 on the revenues of U.S manufacturing firms

Despite the vast research related to the financial crisis, little is known about the perspective of bank dependence and its effects during the financial recession of 2007-2009. The overall image that emerges in this analysis is related to the effect of bank dependence and other fundamentals on the Revenues of firms operating in the U.S manufacturing sector. This paper empirically uses two panel data regression models for 269 firms in a time span from the 2nd quarter of 2000 until the 4th quarter of 2015. It predicts that a decrease in the level of bank dependence decreases Revenue growth, but does not have a significant effect. Moreover, there is significant evidence that firms which were able to reduce the bank dependence growth during the financial crisis saw an increase in the Revenue growth. Additionally, there is evidence that an increase in the Interest Rate and Related Expenses reduces Revenues and an increase in Capital Expenditures and GDP increases them. The lack of feasible data for bank dependence brings limitation to this analysis related to endogeneity. Nevertheless, the main empirical findings seem to be robust throughout different specifications, and this research vastly contributes to the literature of firm-specific microeconomic analysis.