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Do corporate financial patterns in European countries converge and testitfy for disintermediation?

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  • Rivaud-Danset, Dorothée
  • Oheix, Valérie

Abstract

This paper provides a quantitative comparison of the financial patterns of non-financial European firms for seven Continental European countries and the period 1991-2001. Our analytical framework departs from the common one as we consider that long-term and short-term sources of funds have to be analysed separately. Using the BACH database, principal component analysis, cluster analysis and econometrical tests are carried out in order to test for two hypotheses : i) there is a tendency toward grouping around a common corporate financial pattern; ii) there is a general tendency across countries toward less bank financing. We find that differences between European countries remain highly significant so that the first hypothesis is not validated. The second hypothesis is rejected with the long-term intermediation ratio but validated with the short-term one. Indeed, econometrical tests lead to a strong conclusion : the existence of a common trend toward disintermediation of short-term financing. The banking function of allocating liquidity for day-to-day business and providing a certain liquidity insurance to firms is declining whatever the size of firms.

Suggested Citation

  • Rivaud-Danset, Dorothée & Oheix, Valérie, 2005. "Do corporate financial patterns in European countries converge and testitfy for disintermediation?," MPRA Paper 40, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:40
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    corporate financial structure; BACH database; European convergence; financial intermediation; liquidity insurance;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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