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Access to Finance and Composition of Funding during the Crisis: A firm-level analysis for Latin American countries

Sandra Leitner and Robert Stehrer

No 78, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: In 2009, Latin America was sucked into the financial crisis which, following the bankruptcy of Lehman Brothers, echoed around the globe and shook and shocked the entire global financial system. As a consequence, Latin America experienced a slump in real GDP growth, a drop in exports and a collapse in inward FDI flows. Against that backdrop, the paper sheds light on the effects the global financial crisis had on firms’ access to financing as well as on their funding strategies of investment projects. The analysis uses data collected as part of the World Bank Enterprise Survey (WBES) component of the Latin American and Caribbean (LAC) Enterprise Surveys 2006 and 2010 and demonstrates that during the crisis, the availability of internal capital markets played a pivotal role for larger and foreign firms or firms that were part of a larger firm; in contrast, no evidence is found that state-owned firms enjoyed preferential treatment or special budgetary support. In addition, it shows that in the face of the crisis, entrepreneurs adapted their funding strategies firms whose access to financing deteriorated, more intensely relied on bank and supply-chain-financing, foreign firms or firms that were part of a group more strongly availed of internal funds, while firms that both export and import more intensely drew on bank credits to fund their investment projects.

Keywords: financial crisis; access to financing; capital structure; firm level; Latin America (search for similar items in EconPapers)
JEL-codes: D22 G01 G11 L16 (search for similar items in EconPapers)
Pages: 38 pages including 20 Tables and 6 Figures
Date: 2012-02
New Economics Papers: this item is included in nep-cfn and nep-lam
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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