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Firm's Finance and Influence of Global Financial Crisis in the Selected European Countries

Author

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  • Lucie Szczeponková

    (Department of National Economy, Faculty of Economics, VŠB-TU Ostrava, 17. listopadu 15/2172, 708 33 Ostrava-Poruba, Czech Republic)

Abstract

Small and medium enterprises (SME) are key in creation of new jobs and they significantly involved on GDP, innovations and economic growth. These firms very often rely on financial extraneous sources, but acces to these finance is significant business barrier. It means that SME face to financial constraint. This financial constraint is exacerbated by the financial crisis. The goal of this article is to clarify influence of the systemic banking crisis on use own and external sources of finance within small and medium enterprises in the selected european countries. The influence of global financial crisis on firm's finance in selected european countries is estimated by the method Difference-in-Difference (DiD) in combination with panel data. The results show, that companies in regions hit by the systemic banking crisis had a lower share of long-term investments funded by share issues in 2009 or 2012, compared with companies in regions not affected by this crisis in 2005, 2009 or 2012, and companies in regions affected by the systemic crisis in 2005 and higher share of long-term investments financed from ekvity capital. During the financial crisis the conditions for providing extraneous sources to private entities are diminishing, and especially small and medium-sized businesses are forced to use other sources of funds.

Suggested Citation

  • Lucie Szczeponková, 2018. "Firm's Finance and Influence of Global Financial Crisis in the Selected European Countries," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 66(2), pages 583-593.
    • Handle: RePEc:mup:actaun:actaun_2018066020583
    DOI: 10.11118/actaun201866020583
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    References listed on IDEAS

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    1. Casey, Eddie & O'Toole, Conor M., 2014. "Bank lending constraints, trade credit and alternative financing during the financial crisis: Evidence from European SMEs," Journal of Corporate Finance, Elsevier, vol. 27(C), pages 173-193.
    2. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    3. Wignaraja, Ganeshan & Jinjarak, Yothin, 2015. "Why Do SMEs Not Borrow More from Banks? Evidence from the People's Republic of China and Southeast Asia," ADBI Working Papers 509, Asian Development Bank Institute.
    4. Mr. Fabian Valencia & Mr. Luc Laeven, 2012. "Systemic Banking Crises Database: An Update," IMF Working Papers 2012/163, International Monetary Fund.
    5. Casey, Eddie & O'Toole, Conor, 2013. "Bank-lending constraints and alternative financing during the financial crisis: Evidence from European SMEs," Papers WP450, Economic and Social Research Institute (ESRI).
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