Private equity and financial fragility during the crisis

Shai Bernstein*, Josh Lerner, Filippo Mezzanotti

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

34 Scopus citations


Does private equity (PE) contribute to financial fragility during economic crises? The proliferation of poorly structured transactions during booms may increase the vulnerability of the economy to downturns. During the 2008 crisis, PE-backed companies decreased investments less than did their peers and experienced greater equity and debt inflows, higher asset growth, and increased market share. These effects are especially strong among financially constrained companies and those whose PE investors had more resources at the crisis onset. In a survey, PE firms report being active investors during the crisis and spending more time working with their portfolio companies.

Original languageEnglish (US)
Pages (from-to)1309-1373
Number of pages65
JournalReview of Financial Studies
Issue number4
StatePublished - Apr 1 2019

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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