Financial frictions, real estate collateral and small firm activity in Europe

Ryan Banerjee and Kristian Blickle

European Economic Review, 2021, vol. 138, issue C

Abstract: We investigate the importance of housing-based collateral for small and young – i.e. credit constrained – firms across six European economies. We find that borrowing, investment, and employment are all more strongly correlated with house price growth in these small and young firms, compared with slightly larger or older firms. This effect is on average stronger in the boom years, before the global financial crisis, and more pronounced in countries with more lengthy bankruptcy resolution procedures.

Keywords: Firm financing; Real estate collateral; Credit supply; Small firms; Young firms; Financial frictions (search for similar items in EconPapers)
JEL-codes: G30 G33 K11 O47 R30 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Working Paper: Financial frictions, real estate collateral, and small firm activity in Europe (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:138:y:2021:i:c:s001429212100163x

DOI: 10.1016/j.euroecorev.2021.103823

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