Corporate Financial Frictions and Employee Mental Health

Corporate Financial Frictions and Employee Mental Health

Dániel Kárpáti, Luc Renneboog

Series number :

Serial Number: 

Date posted :

November 03 2021

Last revised :

February 15 2023
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  • financial crisis • 
  • Financial Constraints • 
  • Credit Supply • 
  • Mental Health • 
  • job insecurity • 
  • job loss • 
  • depression • 
  • anti-depressants

This paper argues that corporate financial frictions can have an adverse effect on employee mental health, an important determinant of employee productivity. To identify the causal effects of financial frictions, we exploit variation in firms’ need to refinance their long-term debt in 2008, a period when refinancing became more difficult due to the credit crunch.

Using administrative microdata, we find that antidepressant use grows significantly more among employees of firms in higher need of debt refinancing. Much of this effect occurs at employees keeping their jobs, pointing to decreased perceptions of job security as a transmission channel.


Real name:
Dániel Kárpáti