Financing Obstacles and Growth: An Analysis for Euro Area Non-Financial Corporations

30 Pages Posted: 16 Feb 2009

See all articles by Chiara Coluzzi

Chiara Coluzzi

University of Rome Tor Vergata - Faculty of Economics

Annalisa Ferrando

European Central Bank (ECB)

Carmen Martinez-Carrascal

Banco de España

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Date Written: February 13, 2009

Abstract

This paper investigates whether financial obstacles, and, more generally, financial pressure faced by firms, significantly affect firm growth. For this purpose, we use an unbalanced panel of about 1,000,000 observations for around 155,000 non-financial corporations in five euro area countries. In addition to the balance sheet information in this panel, we also rely on firm-level survey data. In this way we are able to work out a direct measure of the firms' probability of facing financing obstacles. Our results indicate that, though based on few variables, this measure appears to be relevant in explaining firm growth in four out of the five countries considered. Other firm-level variables related to the financial pressure faced by firms, such as cash flow (debt burden) are found to exert a positive (negative) impact on firm growth, while the results for leverage are less clear-cut.

Keywords: Financing Constraints, Firm Growth, Panel Data

JEL Classification: C23, E22, G32, L11, L25

Suggested Citation

Coluzzi, Chiara and Ferrando, Annalisa and Martinez-Carrascal, Carmen, Financing Obstacles and Growth: An Analysis for Euro Area Non-Financial Corporations (February 13, 2009). ECB Working Paper No. 997, Available at SSRN: https://ssrn.com/abstract=1342392 or http://dx.doi.org/10.2139/ssrn.1342392

Chiara Coluzzi

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

Annalisa Ferrando (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Carmen Martinez-Carrascal

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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