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oapen-20.500.12657-515282023-01-31T18:35:51Z EIB Working Paper 2021/09 - Market finance as a spare tyre? Corporate investment and access to bank credit in Europe European Investment Bank Business & Economics Investments & Securities bic Book Industry Communication::K Economics, finance, business & management::KF Finance & accounting::KFF Finance::KFFM Investment & securities We estimate a FAVAR with Bayesian techniques in order to investigate the impact of loan supply conditions on euro area corporate investment and its financing structure. We identify shocks to overall demand and loan supply with sign and impact restrictions. Although tightened financial conditions have adversely impacted corporate investment during and after the sovereign debt crisis, the resulting impediments in loan supply, illustrated by lower loan volumes and higher spreads, have been partly alleviated by strengthened corporate debt issuance. We show that (1) part of the protracted increase in debt to loan ratio since the crisis reflects bottlenecks in the provision of bank credit and (2) the tightened loan supply has been more adverse for small corporations with limited market access. Overall, our analysis of macro-financial developments suggests the need for policy actions to deepen the European corporate debt market and enhance market access for smaller corporates. 2021-11-16T05:31:20Z 2021-11-16T05:31:20Z 2021 book 9789286150777 https://library.oapen.org/handle/20.500.12657/51528 eng application/pdf Attribution-NonCommercial-NoDerivatives 4.0 International economics_working_paper_2021_09_en.pdf European Investment Bank European Investment Bank https://doi.org/10.2867/243881 https://doi.org/10.2867/243881 66479d04-7b84-49c0-9a4d-db552a3ecc71 b818ba9d-2dd9-4fd7-a364-7f305aef7ee9 9789286150777 Knowledge Unlatched (KU) European Investment Bank Knowledge Unlatched open access
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OAPEN
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English
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We estimate a FAVAR with Bayesian techniques in order to investigate the impact of loan supply conditions on euro area corporate investment and its financing structure. We identify shocks to overall demand and loan supply with sign and impact restrictions. Although tightened financial conditions have adversely impacted corporate investment during and after the sovereign debt crisis, the resulting impediments in loan supply, illustrated by lower loan volumes and higher spreads, have been partly alleviated by strengthened corporate debt issuance. We show that (1) part of the protracted increase in debt to loan ratio since the crisis reflects bottlenecks in the provision of bank credit and (2) the tightened loan supply has been more adverse for small corporations with limited market access. Overall, our analysis of macro-financial developments suggests the need for policy actions to deepen the European corporate debt market and enhance market access for smaller corporates.
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economics_working_paper_2021_09_en.pdf
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economics_working_paper_2021_09_en.pdf
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economics_working_paper_2021_09_en.pdf
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title_full |
economics_working_paper_2021_09_en.pdf
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title_fullStr |
economics_working_paper_2021_09_en.pdf
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economics_working_paper_2021_09_en.pdf
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economics_working_paper_2021_09_en.pdf
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European Investment Bank
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2021
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1771297493699526656
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