The Impact of the Global Financial Crisis on Firms'Capital Structure

60 Pages Posted: 20 Apr 2016

See all articles by Asli Demirgüç-Kunt

Asli Demirgüç-Kunt

World Bank - Development Research Group; World Bank

Maria Soledad Martinez Peria

International Monetary Fund (IMF)

Thierry Tressel

International Monetary Fund (IMF) - Research Department

Date Written: December 21, 2015

Abstract

Using a data set covering about 277,000 firms across 79 countries over the period 2004-11, this paper examines the evolution of firms' capital structure during the global financial crisis and its aftermath in 2010-11. The study finds that firm leverage and debt maturity declined in advanced economies and developing countries, even in countries that did not experience a crisis. The deleveraging and maturity reduction were particularly significant for privately held firms, including small and medium enterprises. For small and medium-size enterprises, these effects were larger in countries with less efficient legal systems, weaker information-sharing mechanisms, shallower banking systems, and more restrictions on bank entry. In contrast, there is weaker evidence of a significant decline of leverage and debt maturity among firms listed on a stock exchange, which are typically much larger than other firms and likely benefit from the "spare tire" of easier access to capital market financing.

Keywords: Economic Insecurity

Suggested Citation

Demirgüç-Kunt, Asli and Martinez Peria, Maria Soledad and Tressel, Thierry, The Impact of the Global Financial Crisis on Firms'Capital Structure (December 21, 2015). World Bank Policy Research Working Paper No. 7522. Available at SSRN: https://ssrn.com/abstract=2706884

Asli Demirgüç-Kunt (Contact Author)

World Bank - Development Research Group ( email )

United States
202-473-7479 (Phone)
202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/ademirguckunt/

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Maria Soledad Martinez Peria

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Thierry Tressel

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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