Are Euribor rates relevant for Indebtedness of Companies Listed on the Portuguese Stock Index (PSI-20) and the Iberian Index (IBEX 35)? An Empirical Study

Clara Pires (), Ana Cantarinha () and Paulo Ferreira
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Clara Pires: Polytechnic Institute of Beja, Beja, Portugal
Ana Cantarinha: Polytechnic Institute of Beja, Beja, Portugal

Economic Research Guardian, 2024, vol. 14, issue 2, 110-126

Abstract: We analysed the determinants of indebtedness amongst Portuguese companies listed on the PSI-20 and 15 Spanish companies listed on the IBEX 35. The companies operate in various sectors. The study was carried out between 2018 and 2022. We used a panel data methodology and employed three indebtedness models: total assets (TTA), long-term assets (LTA), and short-term assets (STA). We used pooled, fixed, and random effects to generate a model for the determinants of indebtedness; the fixed effects model proved to be the most appropriate. The size of the company and its book value were the most statistically significant variables: the larger the company size, the greater the debt. Meanwhile, higher market capitalization had a negative and statistically significant impact on indebtedness. An increase in Euribor rates resulted in lower debt both in the long term (non-current liabilities) and the short term (current liabilities) for companies in both countries. Therefore, Euribor’s behavior translated into a small but significant reduction in company indebtedness.

Keywords: Indebtedness; Book Value; Euribor; Panel Data (search for similar items in EconPapers)
JEL-codes: C14 G15 H63 (search for similar items in EconPapers)
Date: 2024
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