Bank Funding and Credit Risk of Hungarian Firms: A Study of a Developing Market in a Transition Economy

Posted: 25 Aug 1999

See all articles by Philip L. Hersch

Philip L. Hersch

Wichita State University - W. Frank Barton School of Business - Department of Economics

David Kemme

University of Memphis - Economics

Jeffry M. Netter

Department of Finance; University of Georgia Law School

Abstract

This paper examines the relationships between various owner, firm, and industry characteristics of private-sector Hungarian firms and their difficulty in obtaining bank loans in 1991. We identify several factors that are related to the difficulty firms face in obtaining bank loans including the personal history of the owner of the firm, and characteristics of the firm and its industry. Firms whose owners had business experience or who were past members of the nomenklatura had less difficulty obtaining bank loans than other firms. It was more difficult to obtain loans for firms that leased their plant than firms that did not. Further, the greater the competition faced by a firm the more difficult it was for the firm to get a loan. Finally, there is evidence that the difficulty of obtaining a loan varies by industry.

JEL Classification: G21, G32

Suggested Citation

Hersch, Philip L. and Kemme, David M. and Netter, Jeffry M., Bank Funding and Credit Risk of Hungarian Firms: A Study of a Developing Market in a Transition Economy. Available at SSRN: https://ssrn.com/abstract=6257

Philip L. Hersch

Wichita State University - W. Frank Barton School of Business - Department of Economics ( email )

Wichita, KS 67260-0078
United States
(316) 978-7096 (Phone)
(316) 978-3308 (Fax)

David M. Kemme

University of Memphis - Economics ( email )

Memphis, TN 38152
United States
(901)678-5408 (Phone)
(901)678-2685 (Fax)

Jeffry M. Netter (Contact Author)

Department of Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States
706-542-4450 (Phone)

HOME PAGE: http://www.terry.uga.edu/directory/profile/jnetter/

University of Georgia Law School

225 Herty Drive
Athens, GA 30602
United States

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