The non-financial private firms’ sector of Portugal in 2001–2017: The financial fragility hypothesis-based analysis

The article attempts to analyze the debt crisis in Portugal — as an essential component of the Great Recession in this country — using the financial fragility hypothesis developed by H. P. Minsky. Using a sample of 42 leading Portuguese non-financial private companies, the paper analyzes how the financing regimes used by these companies changed from 2001 to 2017. Before and at the height of the Great Recession, the share of firms with hedge financing mode was decreasing, while the share of firms with fragile financing regimes was increasing. Special attention is paid to how the Portuguese authorities applied austerity policies to deal with the debt crisis, and how they subsequently departed from the principles of this policy. The paper demonstrates that it was precisely after departing from the austerity doctrine that Portuguese non-financial private firms largely managed to get rid of financial fragility.