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Credit Constraints, Heterogeneous Firms and Loan Defaults

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  • Fidrmuc, Jarko
  • Ciaian, Pavel
  • Kancs, d'Artis
  • Pokrivcak, Jan

Abstract

In light of the recent Önancial and economic crisis the present paper analyzes the determinants of loan default. We employ a unique Örm-level panel data of 700 bank loans given to small and medium sized enterprises in Slovakia between 2000 and 2005 to investigate three loan default hypothesis. Testing the SectorRisk Hypothesis, we Önd that agri-food industry does not exhibit higher default rate than other sectors. Testing the Firm-Risk Hypothesis, we Önd that highly indebted Örms are more likely to default on their loan than other Örms. Testing the EU Subsidy Hypothesis we Önd that the newly introduced subsidy system, which is decoupled from production, provides a secure source of income and hence reduces the probability of loan default.

Suggested Citation

  • Fidrmuc, Jarko & Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2010. "Credit Constraints, Heterogeneous Firms and Loan Defaults," Conference papers 331924, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331924
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    Cited by:

    1. Jarko Fidrmuc & Pavel Ciaian & d'Artis Kancs & Jan Pokrivcak, 2013. "Credit Constraints, Heterogeneous Firms and Loan Defaults," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 53-68, May.
    2. Edward Knapp & Jason Loughrey, 2017. "The single farm payment and income risk in Irish farms 2005–2013," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-15, December.
    3. Petr Korab, 2016. "Access to Credit and Unconventional Monetary policy in the Eurozone after the Financial Crisis," MENDELU Working Papers in Business and Economics 2016-68, Mendel University in Brno, Faculty of Business and Economics.
    4. Pokrivčák, Ján & Tóth, Marián, 2022. "Financing Gap of Agro-food Firms and the Role of Policies," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 14(3), September.
    5. Zhaojun Yang & Chunhong Zhang, 2015. "The Pricing of Two Newly Invented Swaps in a Jump-Diffusion Model," Annals of Economics and Finance, Society for AEF, vol. 16(2), pages 371-392, November.

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    More about this item

    Keywords

    Financial Economics; Agricultural and Food Policy;

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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