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Conceptual Framework for Lending Money Outside Business Groups: Evidence from Poland

In: Contemporary Trends and Challenges in Finance

Author

Listed:
  • Anna Białek-Jaworska

    (University of Warsaw)

  • Dominika Gadowska-dos Santos

    (University of Warsaw)

  • Robert Faff

    (University of Queensland Business School)

Abstract

This paper builds a framework for the study of the provision of loans by non-financial companies outside business groups. This framework aims to show the role of cash holdings in providing loans by non-financial companies and constitutes the background for future research of this phenomenon. We provide evidence of the use of cash holdings for loans provision outside business group on the basis of Polish case. In this purpose, we apply the General Method of Moments (GMM) approach. Our findings confirm, that non-financial private companies provide loans outside the business groups with the use of cash holdings retrieved from bank loans and cash flows. We contribute to the literature by indicating that in addition to the common use of cash holdings for financial flexibility and the internal capital market created inside business groups—enterprises’ access to finance in transition economies could be also improved by loans provided by non-financial companies with the use of cash holdings.

Suggested Citation

  • Anna Białek-Jaworska & Dominika Gadowska-dos Santos & Robert Faff, 2019. "Conceptual Framework for Lending Money Outside Business Groups: Evidence from Poland," Springer Proceedings in Business and Economics, in: Krzysztof Jajuga & Hermann Locarek-Junge & Lucjan T. Orłowski & Karsten Staehr (ed.), Contemporary Trends and Challenges in Finance, pages 71-80, Springer.
    • Handle: RePEc:spr:prbchp:978-3-030-15581-0_7
    DOI: 10.1007/978-3-030-15581-0_7
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