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Regional effects or none? Firms' profitability during the Great Recession in Finland

Authors: Saara Tamminen

Publication: Papers in Regional Science, 96(1): 33-59

Date: 2017

Summary

We analyse the effects of the Great Recession (GR) on the profitability of firms located in the main cities versus in the rest of Finland. Based on earlier literature, various regional factors could affect firms' profitability in urban areas in comparison to periphery during a major export demand shock, such as what the GR was in Finland. Yet, there are both negative and positive location specific factors in play. We use micro-data from 2005 to 2010, and employ different profitability indicators and fixed effects panel regressions. Our results indicate that firm and sector level factors affected the profitability changes the most. Regional differences seem to stem mainly from a composition of firm and sector level factors.

Journal article