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Demand for debt and equity before and after the financial crisis

Authors
Journal
Research in International Business and Finance
0275-5319
Publisher
Elsevier
Volume
28
Identifiers
DOI: 10.1016/j.ribaf.2012.10.001
Keywords
  • Sme Finance
  • Discouraged Borrowers
  • Credit Crunch
  • Procyclical Lending
  • Sectoral Differences
Disciplines
  • Economics

Abstract

Abstract Supply and demand responses to financial crises result in fluctuations in credit flow to the private sector. Policy makers concerned with the sustainability and growth of viable firms should disaggregate these responses. Utilising firm level data, this study investigates characteristics of firms applying for external finance before and after the financial crisis, along with characteristics of successful applicants. Notwithstanding changes in credit conditions, salient features of external financing demand endure across the period, including ownership, asset structure, age and size. Failure to secure debt in an earlier period does not deter firm owners from applying for loans in a subsequent period. Evidence suggests that the most financially distressed firms are suffering the greatest consequences of the credit crunch.

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