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Long-term debt maturity and financing constraints of SMEs during the Global Financial Crisis

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  • Veronique Vermoesen
  • Marc Deloof
  • Eddy Laveren

Abstract

We use the recent financial crisis to investigate financing constraints of private small and medium-sized enterprises (SMEs) in Belgium. We hypothesize that SMEs with a large proportion of long-term debt maturing at the start of the crisis had difficulties to renew their loans due to the negative credit supply shock, and hence could invest less. We find a substantial variation in the maturity structure of long-term debt. Firms which at the start of the crisis had a larger part of their long-term debt maturing within the next year experienced a significantly larger drop in investments in 2009. This effect is driven by firms which are ex ante more likely to be financially constrained. Consistent with a causal effect of a credit supply shock to corporate investments, we find no effect in “placebo” periods without a negative credit supply shock. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Veronique Vermoesen & Marc Deloof & Eddy Laveren, 2013. "Long-term debt maturity and financing constraints of SMEs during the Global Financial Crisis," Small Business Economics, Springer, vol. 41(2), pages 433-448, August.
    • Handle: RePEc:kap:sbusec:v:41:y:2013:i:2:p:433-448
    DOI: 10.1007/s11187-012-9435-y
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    More about this item

    Keywords

    Privately held SMEs; Financing constraints; Long-term debt maturity; Global Financial Crisis; Belgium; G01; G31; G32;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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