We test whether financial fluctuations affect firms' decisions, through their impact on banks' cost of funding. We …-2012 sovereign debt crisis. Using newly available data linking over 3,000, mostly privately-held, non-financial firms to their bank(s …), we find that increases in Italian banks' CDS spreads and decreases in their equity valuations lead younger and smaller …

differences in banks' health at the onset of the Great Recession. Several weak banks were rescued by the State and they reduced … credit more than other banks. We compare employment changes from 2006 to 2010 at firms heavily indebted to weak banks before …