Assessing the Financial and Financing Conditions of Firms in Europe: The Financial Module in CompNet

94 Pages Posted: 9 Aug 2015

See all articles by Annalisa Ferrando

Annalisa Ferrando

European Central Bank (ECB)

Sven Blank

Deutsche Bundesbank - Research Centre

Katja Neugebauer

Institute for Applied Economic Research (IAW); University of Tuebingen - Faculty of Economics and Business Administration

Iulia Siedschlag

Economic and Social Research Institute Dublin; Trinity College Dublin - Department of Economics

Matteo Iudice

Brown University

Carlo Altomonte

Bocconi University - Department of Policy Analysis and Public Management

Marie-Helene Felt

Government of Canada - Bank of Canada

Philipp Meinen

Deutsche Bundesbank

Date Written: August 7, 2015

Abstract

This paper provides an encompassing description of the various indicators compiled in the financial module of CompNet using balance sheet information of European firms. We investigate whether and to which extent the heterogeneous financial positions of firms have affected firms’ investment decisions, especially during the recent crisis. Our results confirm the relevance of leverage for investment, in addition to other common determinants, such as cash flow or sales growth. In particular, we find evidence that higher levels of indebtedness act as a drag on investment. We investigate cash holding policies and find significant differences across firm sizes and degrees of financial constraints. Furthermore, our data confirm the pro-cyclicality of firm profitability and its negative association with financial constraints. Finally, we exploit the richness of this new dataset to document the relationships between firms’ financial and financing conditions and their productivity.

Keywords: firm financing conditions and constraints, productivity, firm heterogeneity

JEL Classification: D22, D24, D92, G32

Suggested Citation

Ferrando, Annalisa and Blank, Sven and Neugebauer, Katja and Siedschlag, Iulia and Iudice, Matteo and Altomonte, Carlo and Felt, Marie-Helene and Meinen, Philipp, Assessing the Financial and Financing Conditions of Firms in Europe: The Financial Module in CompNet (August 7, 2015). ECB Working Paper No. 1836. Available at SSRN: https://ssrn.com/abstract=2641070

Annalisa Ferrando (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Sven Blank

Deutsche Bundesbank - Research Centre ( email )

Wilhelm-Epstein-Str. 14
D-60431 Frankfurt/Main
Germany

Katja Neugebauer

Institute for Applied Economic Research (IAW) ( email )

Ob dem Himmelreich 1
Tubingen, 72074
Germany

University of Tuebingen - Faculty of Economics and Business Administration ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

Iulia Siedschlag

Economic and Social Research Institute Dublin ( email )

Whitaker Square
Sir John's Rogerson Quay
Dublin
Ireland

Trinity College Dublin - Department of Economics ( email )

Dublin
Ireland

Matteo Iudice

Brown University ( email )

Box 1860
Providence, RI 02912
United States

Carlo Altomonte

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

Marie-Helene Felt

Government of Canada - Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

Philipp Meinen

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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