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The real effects of credit constraints

Miguel Garcia-Posada ()

Economic Bulletin Articles, 2018, vol. 2

Abstract: This article reviews the existing literature on financial constraints and their effect on investment. It also provides new evidence on this issue using a large sample of firms from 12 European countries for the period 2014-17. The data come from the ECB and European Commission survey on the access to finance of enterprises (SAFE), which focuses specifically on small and medium-sized enterprises (SMEs). The available evidence suggests that credit constraints play a crucial role in the investment decisions of non-financial corporations. JEL Classification: G32, E22

Keywords: credit channel; financing constraints; firm financing; investment; Modigliani-Miller (search for similar items in EconPapers)
Date: 2018-03
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Handle: RePEc:ecb:ecbart:2018:0002:1