We examine the role of financing constraints in depressing output during the Asian financial crisis, using Thai firm-level data. From an output decline of 3.7 percent in our sample in 1998, we find that tightening financing constraints contributed to lowering output by 1.7 percent. We also find evidence of high scale economies or high fixed costs in Thai industries. With high fixed costs, small changes in unit costs or financing costs can lead to large changes in output. We interpret the high fixed costs as evidence of overinvestment prior to the crisis.