5 developed economies (1970–2003) and, by employing the difference-in-difference approach, finds that industries more reliant on external finance recover more slowly after a financial crisis.

Abiad _et al_ . (2011) use both macro-level and industry-level data to examine credit-less events. The authors first use the annual data over the period of 1960–2009 and identify 388 economic recoveries. The study finds that around 20 percent of all recoveries are credit-less and argues that recoveries without bank credit are associated with lower output growth, banking crises, credit booms and construction boom-bust cycles. They also show that the contribution of investment to growth is lower in credit-less recoveries and that, therefore, lower capital accumulation and productivity growth are observed. They also test the relationship between credit-less recoveries and disruptions of financial intermediation using industry-level UNIDO data for 48 countries across 28 manufacturing sectors over the period of 1964–2004. Following Braun and Larrain (2005), by employing the difference-in-difference methodology, they find that industries more reliant on external finance experience lower growth in credit-less events.

# _Firm-level data_

Dagher (2010) studies recovery patterns following the Asian financial crisis using data for 480 firms in three countries in southeast Asia, namely Indonesia, Malaysia and Thailand. The paper finds that sales of firms recover relatively quickly but other market values and debt levels are found to remain below their pre-crisis levels, though there is heterogeneity stemming from firm size and the level of leverage that exists prior to the crisis. The author then builds a theoretical model that accounts for these patterns. In the model, shocks to trend productivity lead to a credit-less recovery under the presence of financial frictions in the form of borrowing constraints. While considering the role of leverage and firm size, the model simulations show that a permanent decline in trend productivity tends to result in a decline in market values and the debt levels of firms; still, output eventually recovers to its pre-crisis level.

Ayyagari _et al_ . (2011) examine the relationship between sales of firms and external credit. The study considers nine systemic sudden stops in emerging market economies in the 1990s as well as the 2008–09 financial crises in the United States. By using the macro-level data for nine emerging markets, the authors argue that there is a pattern on how credit-less recoveries are observed, on average; still, there is significant heterogeneity across these episodes. The study then uses the data on firms in emerging market economies, which consist of 1,326 firms in five countries—Indonesia, South Korea, Mexico, Malaysia and Thailand—and shows that only around 30 percent of firms share a recovery of sales without a pick-up of external credit. Moreover, the authors do not find evidence of credit-less recoveries for firms in the United States during the period 2008–09. In the United States, both in country- and firm-level data, output and sales recover simultaneously with bank credit and current liabilities.

# **III. Recovery Patterns**

This paper uses country-level data and, therefore, aims to provide additional evidence and insights to the first set of the literature reviewed in the previous section. It adds to existing work by showing the recovery patterns following the global financial crisis in 2008–09 and by using the quarterly data to cover more temporary troughs and their subsequent recoveries.