The fittest survive: Regional resilience and exposure to financial crisis

We investigate the nexus between a deep fundamental (individual resilience) and exposure to the financial crisis using cross-country individual evidence from the European Social Survey on more than 25,000 individuals (in 19 countries and 64 regions) from 2006 to 2012. We find that average regional resilience is associated with a significantly lower exposure to income falls for households, and financial difficulties for the organizations where the survey respondent works. We also observe that household exposure to income falls is associated with a significant fall in resilience. If these two pieces of evidence hide causality links they imply that financial shocks enhance regional differences since lower ex-ante resilience increases household and corporate exposure to financial shocks which, in turn, weaken their resilience. As a consequence, financial shocks can widen differences in exposure to financial difficulties and resilience between stronger and weaker regions.