External financial dependence and firms' crisis performance across Europe

Economic research has often relied on a measure of external financial dependence that is constructed using U.S. data and applied to other countries under the assumption of a stable industry ranking across countries. We exploit unique survey data from seven European countries to show that correlations of financial dependence across countries are weak, questioning this assumption. We then use the novel survey-based measure to show that the global financial crisis had a disproportionately negative impact on the real performance of financially dependent firms.