This is a heavily revised and updated version of NBER Working Paper No. 26686: ”The Aggregate Consequences of Default Risk: Evidence from Firm-level Data.” Financial support has come from Lamfalussy Fellowship, Paul Woolley Centre, STICERD, ESRC grant ES/W010356/1 (through POID), DEGRP award ES/L012103/1 and CSC. We would like to thank many seminar participants especially Alina Barnett, Nick Bloom, Gabriel Chorow-Reich, Mark Franklin, Jonathan Haskel, Simon Gilchrist, Pascal Hartwig, Kilian Huber, Michelle Jin, Ralf Martin, David Miles, Rebecca Riley, Rosa Sanchis-Guarner, Chad Syverson, David Thesmar, Garry Young and Daniel Xu. Disclaimer: The paper makes use of confidential data collected by the UK Office for National Statistics and securely provided by the UK Data Service (UKDS). The use of these data does not imply the endorsement of the data owner or UKDS at the UK Data Archive in relation to the interpretation or analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. Any views expressed here are solely those of the authors and do not represent those of the Bank of England or any of its committees, or the National Bureau of Economic Research.