The Impact of the Global Financial Crisis on Firms' Capital Structure

The Impact of the Global Financial Crisis on Firms' Capital Structure

Using a data set covering about 277,000 firms across 79 countries over the period 2004-11, this paper examines the evolution of firms capital structure during the global financial crisis and its aftermath in 2010-11. The study finds that firm leverage and debt maturity declined in advanced economies and developing countries, even in countries that did not experience a crisis. The deleveraging and maturity reduction were particularly significant for privately held firms, including small and medium enterprises. For small and medium-size enterprises, these effects were larger in countries with less efficient legal systems, weaker information-sharing mechanisms, shallower banking systems, and more restrictions on bank entry. In contrast, there is weaker evidence of a significant decline of leverage and debt maturity among firms listed on a stock exchange, which are typically much larger than other firms and likely benefit from the spare tire of easier access to capital market financing.

Saved in:
Bibliographic Details
Main Authors: Martinez-Peria, Maria Soledad, Demirguc-Kunt, Asli, Tressel, Thierry
Format: Working Paper biblioteca
Language:English
en_US
Published: World Bank, Washington, DC 2015-12
Subjects:PROFIT OPPORTUNITIES, ACCOUNTING, DEVELOPING COUNTRIES, INTEREST, ENTRY REQUIREMENTS, DEBT CRISIS, MATURITY STRUCTURE, PRIVATE CREDIT, BANK ENTRY, BANKING SYSTEMS, TOTAL DEBT, CAPITAL STRUCTURES, EQUITY FINANCING, CAPITAL STRUCTURE, BANKRUPTCY LAW, LOAN SPREADS, LOAN, LOAN MATURITIES, BORROWERS, DEBT OVERHANG, STOCK MARKET CAPITALIZATION, DUMMY VARIABLE, BANKRUPTCY, MARKET ACCESS, ASSET RATIO, CASH FLOWS, EXTERNAL FINANCE, DEBT ISSUES, SMALL BUSINESS, LEGAL SYSTEMS, INDEBTEDNESS, MARKET ANALYSTS, MARKET DEVELOPMENT, CONTRACT ENFORCEMENT, DEBT CONTRACT, DEBT OUTSTANDING, DEBT, CAPITAL MARKET, MARKETS, FINANCIAL CRISES, CREDITOR RIGHTS, INTERNATIONAL DEBT, INVESTMENT OPPORTUNITIES, CORPORATE DEBT, BANK CREDIT, LOAN TERMS, BAILOUT, INVESTMENT DECISIONS, TRANSACTIONS, INDIVIDUAL LOAN, EMERGING MARKETS, DEBT FINANCING, MACROECONOMIC INSTABILITY, BOND MARKETS, GOOD, CRISIS COUNTRY, OWNERSHIP STRUCTURE, TRANSPARENCY, COUNTRY RISK, MARKET CAPITALIZATION, MARKET CONDITIONS, INTERNATIONAL DEBT SECURITIES, TURNOVER, FUTURE, PRIVATE CREDIT BUREAU, SHORT‐TERM DEBT, CAPITALIZATION, BANKRUPTCY PROCEDURES, DEBT SECURITIES, CREDIT INFORMATION, ISSUANCE, FIRM PERFORMANCE, CORPORATE INVESTMENT, DEFAULT PROBABILITIES, MINORITY SHAREHOLDERS, DEBT RATIOS, SECURITIES, FINANCIAL INFRASTRUCTURE, FINANCIAL INFRASTRUCTURES, LONG‐TERM DEBT, SHAREHOLDERS, FINANCIAL CRISIS, POSITIVE COEFFICIENTS, INTANGIBLE, LEGAL SYSTEM, INVESTOR PROTECTION, LENDING, GLOBAL FINANCE, SHAREHOLDER, MATURITIES, FINANCIAL SYSTEMS, LIABILITIES, INTERNATIONAL BANKS, CASH FLOW, LONG‐ TERM DEBT, ECONOMIC RISK, STOCK MARKETS, DEBT MATURITY, LOAN DATA, MARKET CAP, DEPOSIT, CAPITAL MARKETS, TRADE CREDIT, LIQUIDATION, STOCK, DUMMY VARIABLES, EXCHANGE, PROPERTY RIGHTS, STOCK MARKET, BANKING SYSTEM, LIQUIDITY, EQUITY MARKET, DISCLOSURE REQUIREMENTS, POLITICAL ECONOMY, MORTGAGE, DEPOSIT MONEY BANKS, BONDS, ASYMMETRIC INFORMATION, TAX, MARKET INFRASTRUCTURE, CREDITORS, INTERNATIONAL BANK, CREDITOR, PENSION, LOCAL BOND MARKET, INCUMBENT BANKS, CENTRAL BANK, MATURITY, PRIVATE BOND, PROTECTION OF INVESTOR, PROTECTION OF INVESTORS, CREDIT BUREAUS, CONTRACTS, BOND MARKET CAPITALIZATION, RETURN, LENDERS, LOANS, CRISIS COUNTRIES, FINANCIAL SYSTEM, RULE OF LAW, FINANCE, RETURN ON ASSETS, TAXES, EQUITY, BANKRUPTCY LAWS, INVESTORS, DEBT RATIO, SOVEREIGN DEBT, ASSETS RATIOS, VALUE OF ASSETS, MARKET CONTAGION, TRADE FINANCE, BANKING CRISIS, ACCESS TO CAPITAL, SUPPLY OF CREDIT, ASSET RATIOS, RETURNS, DEBT MATURITIES, BOND MARKET, WORKING CAPITAL, CONTRACT, PROPERTY, BALANCE SHEET, DEFAULT, MARKET, STOCK MARKET DEVELOPMENT, MARKET VALUE, CREDIT BUREAU, PRODUCTIVE INVESTMENTS, AVERAGE DEBT, INTERESTS, INVESTOR, CORPORATE BONDS, FIXED ASSETS, FINANCIAL DEVELOPMENT, BANK LOANS, STOCK EXCHANGE, INVESTMENT, BOND, COMPOSITION OF DEBT, SHARE, COLLATERAL, FINANCIAL MARKETS, DEBT OBLIGATIONS, TANGIBLE ASSETS, FINANCIAL SHOCKS, INSTITUTIONAL DEVELOPMENT, EXTERNAL DEBT, PROFIT, INVESTMENTS, ASSETS RATIO, BANKING CRISES, CAPITAL MARKET FINANCING, PROFITS, CORPORATE GOVERNANCE,
Online Access:http://documents.worldbank.org/curated/en/2015/12/25705513/impact-global-financial-crisis-firms-capital-structure
https://hdl.handle.net/10986/23623
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Using a data set covering about 277,000 firms across 79 countries over the period 2004-11, this paper examines the evolution of firms capital structure during the global financial crisis and its aftermath in 2010-11. The study finds that firm leverage and debt maturity declined in advanced economies and developing countries, even in countries that did not experience a crisis. The deleveraging and maturity reduction were particularly significant for privately held firms, including small and medium enterprises. For small and medium-size enterprises, these effects were larger in countries with less efficient legal systems, weaker information-sharing mechanisms, shallower banking systems, and more restrictions on bank entry. In contrast, there is weaker evidence of a significant decline of leverage and debt maturity among firms listed on a stock exchange, which are typically much larger than other firms and likely benefit from the spare tire of easier access to capital market financing.

Similar Items