Can Firms Grow Without Credit? A Quantile Panel Analysis in the Euro Area

Sophia Dimelis (), Ioannis Giotopoulos and Helen Louri

Journal of Industry, Competition and Trade, 2017, vol. 17, issue 2, No 2, 153-183

Abstract: Abstract This paper explores the effects of changes in bank credit on firm growth before and after the recent global financial crisis, taking into account firm-specific and country-specific characteristics as well as structural characteristics of domestic banking sectors. Panel quantile analysis is used on a sample of 2075 euro area firms in 2005–2011, enabling thus the identification of potential differences in the dynamics between high-growth and low-growth firms. The post-2008 credit crunch is found to seriously affect mostly high-leveraged, low-growth firms operating in concentrated banking systems with weak foreign presence, and in riskier and less financially developed European economies. By contrast, high-growth firms are not affected and, thus, may be expected to facilitate and sustain the post-crisis credit-less recovery in the euro area. A policy implication of our findings is that creating the right conditions for the emergence of innovative high-growth firms may be a more effective growth strategy, especially in adverse times, as compared to a general policy covering all types of firms.

Keywords: Credit crunch; Firm growth; Financial crisis; High-growth firms; Panel Quantile regressions (search for similar items in EconPapers)
JEL-codes: E51 L1 L25 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s10842-016-0216-1

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