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Financing obstacles and growth: An analysis for euro area non-financial corporations

Chiara Coluzzi (), Annalisa Ferrando () and Carmen Martínez-Carrascal ()
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Chiara Coluzzi: University of Rome Tor Vergata
Carmen Martínez-Carrascal: Banco de España

Authors registered in the RePEc Author Service: Carmen Martinez Carrascal

No 836, Working Papers from Banco de España

Abstract: This paper investigates whether financial obstacles, and, more generally, financial pressure faced by firms, significantly affect firm growth. For this purpose, we use an unbalanced panel of about 1,000,000 observations for around 155,000 non-financial corporations in five euro area countries. In addition to the balance sheet information in this panel, we also rely on firm level survey data. In this way we are able to work out a direct measure of the firms’ probability of facing financing obstacles. Our results indicate that, though based on few variables, this measure appears to be relevant in explaining firm growth in four out of the five countries considered. Other firm-level variables related to the financial pressure faced by firms, such as cash flow (debt burden) are found to exert a positive (negative) impact on firm growth, while the results for leverage are less clear-cut.

Keywords: Financing Constraints; Firm Growth; Panel Data (search for similar items in EconPapers)
JEL-codes: C23 E22 G32 L11 L25 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2009-01
New Economics Papers: this item is included in nep-cfn, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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