… access to financial markets and non-trivial and focus on the firm dynamics generated from
… The implied firm dynamics, including entry and exit decisions are discussed. In the fourth …

… that small and young firms respond differently to shocks in the financial markets than larger,
older … In the third section we explore the qualitative implications for the aggregate dynamics. …

… when z switches from z2 to z1 is equal to the number of job created by a small firm when
z … This is because the liquidation of the firm is not in the interest of the financial intermediary. …

… the formation of the liquidation value and the continuation value of insolvent firms. In the …
the outcome of the financial contracts and the dynamic optimization creates rich implications …

… distribution of firms and the structure of financial markets are … for characteristics of the firm,
the effect of building a relation with a … , so that the liquidation value of capital is zero. Existing …

… and liquidation decisions of firms that face a labor market with … elimination of inefficient firms
and the creation of new firms) … the interaction of labor market and capital market frictions. (…

… We deviate from the literature on firm dynamics, which focuses on employment creation as a
… is not directly linked to the foundation and liquidation of firms. Thus, entry in this case is the …

… of creating liquidity from the point of view of non−financial … , when firms borrow necessary
funds from financial markets or … Financial crises are literally characterized as insolvency of a …

… Firm dynamics generated by these assumptions are realistic: … the model, firms with low wealth
choose to liquidate their business in … Interest rate r satisfies the capital market equilibrium …

… with a fall in new firm creation and a fall in firm equity values. We … Our model’s specification
of the financial market draws on … Here, the lenders can only liquidate the firms' end-of-period …