Abstract

http://ssrn.com/abstract=1713541
 
 

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Access to Liquidity and Corporate Investment in Europe During the Financial Crisis


Murillo Campello


Cornell University; National Bureau of Economic Research (NBER)

Erasmo Giambona


University of Amsterdam - Finance Group; Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

John R. Graham


Duke University; NBER

Campbell R. Harvey


Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER)

August 18, 2011


Abstract:     
We use a unique dataset to show how firms in Europe used credit lines during the financial crisis. We find that firms with restricted access to credit (small, private, non-investment grade, and unprofitable) draw more funds from their credit lines during the crisis than their large, public, investment-grade, profitable counterparts. Interest spreads increased (especially in “market-based economies”), but commitment fees remained unchanged Our findings suggest that credit lines did not dry up during the crisis and provided the liquidity that firms used to cope with this exceptional contraction. In particular, credit lines provided the liquidity companies needed to invest during the crisis.

Number of Pages in PDF File: 38

Keywords: Financial Crisis, Investment Spending, Lines of Credit

JEL Classification: G31

working papers series


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Date posted: November 25, 2010 ; Last revised: August 23, 2011

Suggested Citation

Campello, Murillo and Giambona, Erasmo and Graham, John R. and Harvey, Campbell R., Access to Liquidity and Corporate Investment in Europe During the Financial Crisis (August 18, 2011). Available at SSRN: http://ssrn.com/abstract=1713541 or http://dx.doi.org/10.2139/ssrn.1713541

Contact Information

Murillo Campello
Cornell University ( email )
114 East Avenue
369 Sage Hall
Ithaca, NY 14853
United States
HOME PAGE: http://www.johnson.cornell.edu/Faculty-And-Research/Profile.aspx?id=mnc35

National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
Erasmo Giambona (Contact Author)
University of Amsterdam - Finance Group ( email )
Roetersstraat 18
Amsterdam, 1018WB
Netherlands
+31 20 525 5321 (Phone)
HOME PAGE: http://www1.fee.uva.nl/pp/egiambona/
Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) ( email )
Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands
John Robert Graham
Duke University ( email )
Box 90120
Durham, NC 27708-0120
United States
919-660-7857 (Phone)
919-660-8030 (Fax)
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Campbell R. Harvey
Duke University - Fuqua School of Business ( email )
Box 90120
Durham, NC 27708-0120
United States
919-660-7768 (Phone)
919-660-8030 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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References:  75
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