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The Global Financial Crisis and the COVID-19 Pandemic

Antonio Moreno    Universidad de Navarra, España    

Steven Ongena    University of Zurich, Switzerland; Swiss Finance Institute; KU Leuven and CEPR    

Alexia Ventula Veghazy    European Central Bank    

Alexander F. Wagner    University of Zurich, Switzerland; Swiss Finance Institute; European Corporate Governance Institute; CEPR    

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abstract

We sketch possible linkages between features of the 2008-2009 financial crisis and outcomes of the 2020 COVID-19 pandemic. We start from three features of the financial crisis, i.e. (1) costly bank bailouts, (2) constrained SME credit, and (3) strict bank regulation. We then discuss their intermediate outcomes in terms of: (1) sovereign debt accumulation and possible cuts in public health spending, (2) the slowing of economic growth and labour mobility; and (3) bank zombie lending, to arrive at the COVID-19 pandemic severity in terms of infection and death rates and the difficulties in designing and implementing economic support policies.

Published
July 31, 2020
Accepted
June 30, 2020
Submitted
June 3, 2020
Language
EN
ISBN (EBOOK)
978-88-6969-442-4

Keywords: Bank defaultZombie lendingFinancial crisisLocal creditCOVID-19 pandemic

Copyright: © 2020 Antonio Moreno, Steven Ongena, Alexia Ventula Veghazy, Alexander F. Wagner. This is an open-access work distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction is permitted, provided that the original author(s) and the copyright owner(s) are credited and that the original publication is cited, in accordance with accepted academic practice. The license allows for commercial use. No use, distribution or reproduction is permitted which does not comply with these terms.