Corporate NPL portfolios in CESEE countries: how coprorate leverage and debt spillovers affect firm performance

Joze Damijan

No 579725, Working Papers of VIVES - Research Centre for Regional Economics from KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics

Abstract: Private growth and investment in most of central, eastern and south-eastern Europe (CESEE) is still hampered by persistent financial distress in the corporate sector, resulting from the excessive debt taken on before the 2008 crisis. This paper looks at how this excess leverage affects firm performance in these countries. Apart from the negative impact of a firm’s own financial distress on employment and investment, we find that the most indebted companies negatively affect other firms too, and that these effects worsen during the financial crisis and are more severe for small and medium-sized firms. Therefore, resolving the issue of corporate non-performing loans can have far more widespread benefits than previously believed, with SMEs as the main beneficiaries. http://www.ebrd.com/publications/working-papers/corporate-npl-portfolios.html

Keywords: NPL; CESEE countries; corporate leverage; debt spillover; firm performance (search for similar items in EconPapers)
Date: 2016-08
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Published in EBRD Working Papers , volume 191

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Persistent link: https://EconPapers.repec.org/RePEc:ete:vivwps:579725

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