Firm or Bank Weakness? Access to Finance Since the European Sovereign Debt Crisis

44 Pages Posted: 10 Jan 2020

See all articles by Giuseppe Corbisiero

Giuseppe Corbisiero

Central Bank of Ireland

Donata Faccia

European Central Bank (ECB); Trinity College (Dublin)

Date Written: January, 2020

Abstract

This paper uses a unique dataset where credit rejections experienced by euro area firms are matched with firm and bank characteristics. This allows us to study simultaneously the role that bank and firm weakness had in the credit reduction observed in the euro area during the sovereign debt crisis, and in credit developments characterising the post-crisis recovery. Compared with the existing literature matching borrowers’ and lenders’ characteristics, our dataset provides a better representation of euro area firms of small and medium size. Our findings suggest that, while firm balance sheet factors have been strong determinants of credit rejections, in the crisis period bank weakness made it harder to obtain external finance for firms located in stressed countries of the euro area.

Keywords: bank lending, credit crunch, credit supply, European sovereign debt crisis

JEL Classification: E44, F36, G01, G21

Suggested Citation

Corbisiero, Giuseppe and Faccia, Donata, Firm or Bank Weakness? Access to Finance Since the European Sovereign Debt Crisis (January, 2020). ECB Working Paper No. 2361, Available at SSRN: https://ssrn.com/abstract=3517294

Giuseppe Corbisiero (Contact Author)

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

Donata Faccia

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Trinity College (Dublin) ( email )

D2
Ireland

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