If the banking system is the key element allowing firms that depend heavily upon external funding sources to finance their growth, then an impairment of these intermediaries – in a system where such intermediaries are important – should have a disproportionate contractionary impact on precisely those sectors that flourished in "normal" times, due to their  3  Our paper provides a literature review.
4  Caprio and Klingbiel (2002). 5  See Levine (1997, 2005) and Kroszner and Strahan (2005) for overviews. 6  One measure of financial or external dependence is the fraction of capital expenditures not financing with cash flows from operations. See Rajan and Zingales (1998). 2  BIS Review 98/2007  reliance on banks.