Firm Behaviour and Financial Pressure: Evidence from Spanish Panel Data

29 Pages Posted: 21 Sep 2007


This paper examines responses by firms in Spain to the experience of financial pressure. Using panel data methods applied to a large company panel, a number of aspects of corporate behaviour and the response of each to financial pressure are examined. We consider fixed investment, inventories, employment - distinguishing both permanent and temporary contract employees - and dividend policies. Our results include finding significant effects of financial pressure from borrowing costs on each outcome, particularly investment and employment. The effects on temporary employment are also found to be larger and work through more quickly than on permanent employment.

Suggested Citation

Benito, Andrew and Hernando, Ignacio, Firm Behaviour and Financial Pressure: Evidence from Spanish Panel Data. Bulletin of Economic Research, Vol. 59, No. 4, pp. 283-311, October 2007, Available at SSRN: or

Andrew Benito

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Ignacio Hernando (Contact Author)

Banco de España ( email )

Madrid 28014
+34 91 338 5186 (Phone)
+34 91 338 5678 (Fax)

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