The Superstar Buyer Penalty during Financial Crises: Evidence from Firm-to-Firm Trade Data

Abstract:

This paper documents that firms connected with superstar buyers experience larger real losses from financial shocks. We identify a new credit supply shock in Italy following the onset of the sovereign debt crisis in 2011. We show that exporters more exposed to fragile banks experienced a larger reduction in export flows between 2011 and 2015. Importantly, this decline was larger for exporters connected with foreign superstar buyers prior to the shock. This amplification effect reflects foreign superstar firms reallocating their purchases away from more exposed Italian exporters, which, as a consequence, also suffered weaker employment growth.