Corporate NPL Portfolios in CESEE Countries: How Corporate Leverage and Debt Spillovers Affect Firm Performance

59 Pages Posted: 8 Feb 2018

See all articles by Jože P. Damijan

Jože P. Damijan

University of Ljubljana, Slovenia - Department of International Economics

Date Written: September 15, 2016

Abstract

Private growth and investment in most of central, eastern and south-eastern Europe (CESEE) is still hampered by persistent financial distress in the corporate sector, resulting from the excessive debt taken on before the 2008 crisis. This paper looks at how this excess leverage affects firm performance in these countries. Apart from the negative impact of a firm’s own financial distress on employment and investment, we find that the most indebted companies negatively affect other firms too, and that these effects worsen during the financial crisis and are more severe for small and medium-sized firms. Therefore, resolving the issue of corporate non-performing loans can have far more widespread benefits than previously believed, with SMEs as the main beneficiaries.

Keywords: financial distress, corporate debt restructuring, negative debt spillovers

JEL Classification: G33, G34, K22, K30

Suggested Citation

Damijan, Joze P., Corporate NPL Portfolios in CESEE Countries: How Corporate Leverage and Debt Spillovers Affect Firm Performance (September 15, 2016). EBRD Working Paper No. 191. Available at SSRN: https://ssrn.com/abstract=3119678 or http://dx.doi.org/10.2139/ssrn.3119678

Joze P. Damijan (Contact Author)

University of Ljubljana, Slovenia - Department of International Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia
+386 61 189 24 00 (Phone)
+386 61 189 26 98 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
17
Abstract Views
189
PlumX Metrics