The paper explores the relationship between firm debt and real outcomes in 24 European economies from 2000-2018. It finds that a rise in credit to firms is associated with short-term employment growth, but this growth declines in the medium-term. The study also shows that the relationship between debt and employment growth is more pronounced in countries with higher levels of financial development. The authors suggest that the decline in medium-term employment growth may be due to the accumulation of debt, which can lead to financial distress and ultimately, a decrease in investment and employment. Overall, the study highlights the importance of monitoring and managing debt levels to prevent potential economic downturns.
