This paper proposes a framework for studying the boom and bust in Finland in the late 1980s and early 1990s. We develop a small open economy DSGE model with balance sheet-constrained firms à la BGG and calibrate it to the Finnish economy. We use the model to simulate three events that are...

The paper examines the role of bank relationships in business closures during the Finnish economic crisis of the early 1990s. We utilise a unique panel data set of 474 small and medium-sized firms, for which we have standard accounting information and for which we can in addition identify...

The paper discusses the possibility that the workings of the financial system contributed the boom-bust cycle in the Finnish credit market since the mid-1980s. We begin with a review of the most prominent theoretical arguments about the role of "financial factors". Also the main findings of a...