THE IMPACT OF THE 2008-2009 GLOBAL CRISIS ON RETAILERS’ AND CORE INDUSTRY FIRMS’ LOAN APPLICATIONS

Halil Dincer Kaya
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Halil Dincer Kaya: NORTHEASTERN STATE UNIVERSITY, UNITED STATES

Annals - Economy Series, 2023, vol. 1, 16-24

Abstract: The global crisis affected the financing conditions around the world. In this study, we examine two groups of firms in Eastern Europe and Central Asia: retailers and core industry firms. First, we look at whether more or fewer financial institutions required a collateral when these firms applied for a loan. For retailers, we do not find any significant change in the percentage of firms that were required to show a collateral after the crisis started. However, for core firms, we find that fewer firms faced a collateral requirement post-crisis. Therefore, post-crisis, we can say that the financing conditions (in terms of the collateral requirement) were less strict for core firms. Then, we examine whether the types of assets used as collateral changed for each group after the crisis. We find that, post-crisis, fewer retailers showed machinery and equipment, or accounts receivable and inventories, or other items. However, postcrisis, more retailers showed personal assets of the owner as collateral. We do not find any significant change in the use of lands and buildings as collateral by retailers. When we examine core firms, we find that, post-crisis, fewer firms showed lands and buildings, and machinery and equipment as collateral, and more firms showed personal assets of owner as collateral. There was no significant change in the use of accounts receivable and inventories or other items for this group. Overall, we conclude that, during these tough times, both retailers and core firms had to use their owner’s personal assets as a last resort.

Keywords: collateral; retailer; core industries; loan; global crisis; eastern Europe; central Asia; personal assets (search for similar items in EconPapers)
Date: 2023
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