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Are Euribor rates relevant for Indebtedness of Companies Listed on the Portuguese Stock Index (PSI-20) and the Iberian Index (IBEX 35)? An Empirical Study

Author

Listed:
  • Clara Pires

    (Polytechnic Institute of Beja, Beja, Portugal)

  • Ana Cantarinha

    (Polytechnic Institute of Beja, Beja, Portugal)

  • Paulo Ferreira

    (Polytechnic Institute of Portalegre, Portalegre, Portugal, and VALORIZA – Research Centre for Endogenous Resources Valorisation, Portalegre, Portugal)

Abstract

We analysed the determinants of indebtedness amongst Portuguese companies listed on the PSI-20 and 15 Spanish companies listed on the IBEX 35. The companies operate in various sectors. The study was carried out between 2018 and 2022. We used a panel data methodology and employed three indebtedness models: total assets (TTA), long-term assets (LTA), and short-term assets (STA). We used pooled, fixed, and random effects to generate a model for the determinants of indebtedness; the fixed effects model proved to be the most appropriate. The size of the company and its book value were the most statistically significant variables: the larger the company size, the greater the debt. Meanwhile, higher market capitalization had a negative and statistically significant impact on indebtedness. An increase in Euribor rates resulted in lower debt both in the long term (non-current liabilities) and the short term (current liabilities) for companies in both countries. Therefore, Euribor’s behavior translated into a small but significant reduction in company indebtedness.

Suggested Citation

  • Clara Pires & Ana Cantarinha & Paulo Ferreira, 2024. "Are Euribor rates relevant for Indebtedness of Companies Listed on the Portuguese Stock Index (PSI-20) and the Iberian Index (IBEX 35)? An Empirical Study," Economic Research Guardian, Mutascu Publishing, vol. 14(2), pages 110-126, December.
  • Handle: RePEc:wei:journl:v:14:y:2024:i:2:p:110-126
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    More about this item

    Keywords

    Indebtedness; Book Value; Euribor; Panel Data;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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