IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/62257.html
   My bibliography  Save this paper

Demand for debt and equity before and after the financial crisis

Author

Listed:
  • Mac an Bhaird, Ciarán

Abstract

Supply and demand responses to financial crises result in fluctuations in credit flow to the private sector. Policy makers concerned with the sustainability and growth of viable firms should disaggregate these responses. Utilising firm level data, this study investigates characteristics of firms applying for external finance before and after the financial crisis, along with characteristics of successful applicants. Notwithstanding changes in credit conditions, salient features of external financing demand endure across the period, including ownership, asset structure, age and size. Failure to secure debt in an earlier period does not deter firm owners from applying for loans in a subsequent period. Evidence suggests that the most financially distressed firms are suffering the greatest consequences of the credit crunch.

Suggested Citation

  • Mac an Bhaird, Ciarán, 2012. "Demand for debt and equity before and after the financial crisis," MPRA Paper 62257, University Library of Munich, Germany, revised 05 Feb 2013.
    • Handle: RePEc:pra:mprapa:62257
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/62257/1/MPRA_paper_62257.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Karl Whelan, 2010. "Policy Lessons from Ireland’s Latest Depression," The Economic and Social Review, Economic and Social Studies, vol. 41(2), pages 225-254.
    2. Traci L. Mach & John D. Wolken, 2012. "Examining the Impact of Credit Access on Small Firm Survivability," Contributions to Economics, in: Giorgio Calcagnini & Ilario Favaretto (ed.), Small Businesses in the Aftermath of the Crisis, edition 127, pages 189-210, Springer.
    3. McCann, Fergal, 2011. "Access to credit amongst SMEs: Pre and post-crisis evidence from Eastern Europe," Economic Letters 03/EL/11, Central Bank of Ireland.
    4. Judith Jordan & Julian Lowe & Peter Taylor, 1998. "Strategy and Financial Policy in UK Small Firms," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(1‐2), pages 1-27, January.
    5. Vos, Ed & Yeh, Andy Jia-Yuh & Carter, Sara & Tagg, Stephen, 2007. "The happy story of small business financing," Journal of Banking & Finance, Elsevier, vol. 31(9), pages 2648-2672, September.
    6. Kon, Y & Storey, D J, 2003. "A Theory of Discouraged Borrowers," Small Business Economics, Springer, vol. 21(1), pages 37-49, August.
    7. Francisco Sogorb-Mira, 2005. "How SME Uniqueness Affects Capital Structure: Evidence From A 1994–1998 Spanish Data Panel," Small Business Economics, Springer, vol. 25(5), pages 447-457, December.
    8. Nikolaos Daskalakis & Maria Psillaki, 2007. "Do country or firm factors explain capital structure? Evidence from SMEs in France and Greece," Applied Financial Economics, Taylor & Francis Journals, vol. 18(2), pages 87-97.
    9. Ciarán mac an Bhaird & Brian Lucey, 2010. "Determinants of capital structure in Irish SMEs," Small Business Economics, Springer, vol. 35(3), pages 357-375, October.
    10. van der Wijst,Nico, 2013. "Finance," Cambridge Books, Cambridge University Press, number 9781107029224.
    11. Gregory F. Udell, 2009. "How will a credit crunch affect small business finance?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue mar6.
    12. Becchetti, Leonardo & Trovato, Giovanni, 2002. "The Determinants of Growth for Small and Medium Sized Firms: The Role of the Availability of External Finance," Small Business Economics, Springer, vol. 19(4), pages 291-306, December.
    13. Timo Baas & Mechthild Schrooten, 2006. "‘Relationship Banking and SMEs: A Theoretical Analysis’," Small Business Economics, Springer, vol. 27(2), pages 127-137, October.
    14. Gavin Cassar & Scott Holmes, 2003. "Capital structure and financing of SMEs: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 43(2), pages 123-147, July.
    15. David de Meza & David C. Webb, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 281-292.
    16. Diamond, Douglas W, 1989. "Reputation Acquisition in Debt Markets," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 828-862, August.
    17. Honohan, Patrick, 2009. "Resolving Ireland’s Banking Crisis," The Economic and Social Review, Economic and Social Studies, vol. 40(2), pages 207-231.
    18. Lawless, Martina & McCann, Fergal, 2011. "Credit Access for Small and Medium Firms: Survey Evidence for Ireland," Research Technical Papers 11/RT/11, Central Bank of Ireland.
    19. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    20. Mateev, Miroslav & Poutziouris, Panikkos & Ivanov, Konstantin, 2013. "On the determinants of SME capital structure in Central and Eastern Europe: A dynamic panel analysis," Research in International Business and Finance, Elsevier, vol. 27(1), pages 28-51.
    21. Graham Hall & Patrick Hutchinson & Nicos Michaelas, 2000. "Industry Effects on the Determinants of Unquoted SMEs' Capital Structure," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(3), pages 297-312.
    22. Beck, Thorsten & Demirgüç-Kunt, Asli & Maksimovic, Vojislav, 2008. "Financing patterns around the world: Are small firms different?," Journal of Financial Economics, Elsevier, vol. 89(3), pages 467-487, September.
    23. Gavin Cassar & Scott Holmes, 2003. "Capital structure and financing of SMEs: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 43(2), pages 123-147.
    24. Jeffrey A. Dubin & Douglas Rivers, 1989. "Selection Bias in Linear Regression, Logit and Probit Models," Sociological Methods & Research, , vol. 18(2-3), pages 360-390, November.
    25. Holton, Sarah & O'Brien, Martin, 2011. "Firms’ Financing During the Crisis: A Regional Analysis," Quarterly Bulletin Articles, Central Bank of Ireland, pages 89-106, January.
    26. Constantin Gurdgiev & Brian M. Lucey & Ciarán Mac an Bhaird & Lorcan Roche-Kelly, 2011. "The Irish Economy: Three Strikes and You’re Out?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(1), pages 19-41, March.
    27. Meghana Ayyagari & Thorsten Beck & Asli Demirguc-Kunt, 2007. "Small and Medium Enterprises Across the Globe," Small Business Economics, Springer, vol. 29(4), pages 415-434, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Akbar, Saeed & Rehman, Shafiq ur & Liu, Jia & Shah, Syed Zulfiqar Ali, 2017. "Credit supply constraints and financial policies of listed companies during the 2007–2009 financial crisis," Research in International Business and Finance, Elsevier, vol. 42(C), pages 559-571.
    2. Anagnostopoulou, Seraina C. & Drakos, Konstantinos, 2016. "Bank loan terms and conditions: Is there a macro effect?," Research in International Business and Finance, Elsevier, vol. 37(C), pages 269-282.
    3. Dimitras, Augustinos I. & Kyriakou, Maria I. & Iatridis, George, 2015. "Financial crisis, GDP variation and earnings management in Europe," Research in International Business and Finance, Elsevier, vol. 34(C), pages 338-354.
    4. Mac an Bhaird, Ciarán & Vidal, Javier Sanchez & Lucey, Brian, 2016. "Discouraged borrowers: Evidence for Eurozone SMEs," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 46-55.
    5. Power Jane & Power Bernadette & Ryan Geraldine, 2022. "Determinants of equity financing: a demand-side analysis of Irish indigenous technology-based firms," The Irish Journal of Management, Sciendo, vol. 41(1), pages 52-68, July.
    6. Wild, Joerg, 2016. "Efficiency and risk convergence of Eurozone financial markets," Research in International Business and Finance, Elsevier, vol. 36(C), pages 196-211.
    7. Dah, Mustafa A., 2016. "Governance and firm value: The effect of a recession," Research in International Business and Finance, Elsevier, vol. 37(C), pages 464-476.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rashid Khalil* & Dr. Mohd. Sollehudin Bin Shuaib & Dr. Suhaimi Bin Ishak, 2018. "Bank-SMEs Relationship: A Critical Review of Firm & Industry Specific Determinants Influencing Banks’ Performance," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 4(12), pages 777-791, 12-2018.
    2. Ciarán mac an Bhaird & Brian Lucey, 2010. "Determinants of capital structure in Irish SMEs," Small Business Economics, Springer, vol. 35(3), pages 357-375, October.
    3. Dong Xiang & Andrew C. Worthington & Helen Higgs, 2011. "Firm-level determinants and impacts of finance-seeking behaviour and outcomes for small and medium-sized enterprises (SMEs) in Australia," Discussion Papers in Finance finance:201115, Griffith University, Department of Accounting, Finance and Economics.
    4. Matias, Fernanda & Serrasqueiro, Zélia, 2017. "Are there reliable determinant factors of capital structure decisions? Empirical study of SMEs in different regions of Portugal," Research in International Business and Finance, Elsevier, vol. 40(C), pages 19-33.
    5. Brian Lucey & Colm KEarney & Ciaran MacAnBhaird, 2012. "Culture and capital structure in small and medium sized firms," The Institute for International Integration Studies Discussion Paper Series iiisdp419, IIIS.
    6. Mac an Bhaird, Ciarán & Vidal, Javier Sanchez & Lucey, Brian, 2016. "Discouraged borrowers: Evidence for Eurozone SMEs," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 46-55.
    7. James Agyei & Shaorong Sun & Eugene Abrokwah, 2020. "Trade-Off Theory Versus Pecking Order Theory: Ghanaian Evidence," SAGE Open, , vol. 10(3), pages 21582440209, July.
    8. Iris Kruja, 2014. "Impact of Firm Specific Charachteristics in the Access to External Finances of SMEs," Proceedings of FIKUSZ '14, in: Pál Michelberger (ed.),Proceedings of FIKUSZ '14, pages 135-160, Óbuda University, Keleti Faculty of Business and Management.
    9. Reto Wernli & Andreas Dietrich, 2022. "Only the brave: improving self-rationing efficiency among discouraged Swiss SMEs," Small Business Economics, Springer, vol. 59(3), pages 977-1003, October.
    10. David K. Chalmers & Marco Della Porta & Luca Sensini, 2020. "Export Intensity and Leverage: An Empirical Analysis of Spanish SMEs," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 382-386.
    11. Jun Du & Alessandra Guariglia & Alexander Newman, 2010. "Does social capital affect the financing decisions of Chinese small and medium-sized enterprises?," Discussion Papers 10/13, University of Nottingham, GEP.
    12. Miglo, Anton, 2022. "Theories of financing for entrepreneurial firms: a review," MPRA Paper 115835, University Library of Munich, Germany.
    13. Degryse, H.A. & de Goeij, P. C. & Kappert, P., 2009. "The Impact of Firm and Industry Characteristics on Small Firms' Capital Structure : Evidence from Dutch Panel Data," Discussion Paper 2009-21, Tilburg University, Center for Economic Research.
    14. María Palacín-Sánchez & Luis Ramírez-Herrera & Filippo di Pietro, 2013. "Capital structure of SMEs in Spanish regions," Small Business Economics, Springer, vol. 41(2), pages 503-519, August.
    15. Geert Campenhout & Tom Caneghem, 2013. "How did the notional interest deduction affect Belgian SMEs’ capital structure?," Small Business Economics, Springer, vol. 40(2), pages 351-373, February.
    16. Andreas Mueller & Luca Sensini, 2023. "Determinants of Financing Decisions of SMEs: Evidence from Hotel Industry," International Journal of Business and Management, Canadian Center of Science and Education, vol. 16(3), pages 117-117, April.
    17. Alessandra Amendola & Marinella Boccia & Gianluca Mele & Luca Sensini, 2020. "Tax Policy and Firms' Financial Choices: Empirical Evidence from the Dominican Republic," MIC 2020: The 20th Management International Conference,, University of Primorska Press.
    18. Nguyen, Thi Nhung & Gan, Christopher & Hu, Baiding, 2015. "An empirical analysis of credit accessibility of small and medium sized enterprises in Vietnam," MPRA Paper 81911, University Library of Munich, Germany, revised 2015.
    19. David K. Chalmers & Marco Della Porta & Luca Sensini, 2020. "Export Intensity and Leverage: An Empirical Analysis of Spanish SMEs," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 382-386.
    20. Gama, Ana Paula Matias & Duarte, Fábio Dias & Esperança, José Paulo, 2017. "Why discouraged borrowers exist? An empirical (re)examination from less developed countries," Emerging Markets Review, Elsevier, vol. 33(C), pages 19-41.

    More about this item

    Keywords

    SME Finance; Discouraged borrowers; Credit crunch; Procyclical lending; Sectoral differences.;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:62257. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.