Long-term debt maturity and financing constraints of SMEs during the Global Financial Crisis

Veronique Vermoesen, Marc Deloof () and Eddy Laveren

Small Business Economics, 2013, vol. 41, issue 2, 433-448

Abstract: We use the recent financial crisis to investigate financing constraints of private small and medium-sized enterprises (SMEs) in Belgium. We hypothesize that SMEs with a large proportion of long-term debt maturing at the start of the crisis had difficulties to renew their loans due to the negative credit supply shock, and hence could invest less. We find a substantial variation in the maturity structure of long-term debt. Firms which at the start of the crisis had a larger part of their long-term debt maturing within the next year experienced a significantly larger drop in investments in 2009. This effect is driven by firms which are ex ante more likely to be financially constrained. Consistent with a causal effect of a credit supply shock to corporate investments, we find no effect in “placebo” periods without a negative credit supply shock. Copyright Springer Science+Business Media, LLC. 2013

Keywords: Privately held SMEs; Financing constraints; Long-term debt maturity; Global Financial Crisis; Belgium; G01; G31; G32 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (82)

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DOI: 10.1007/s11187-012-9435-y

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