External Finance and Firm Survival in the Aftermath of the Crisis : Evidence from Eastern Europe and Central Asia

Two data sets are used to study how country and firm characteristics affected firms' financial constraints and their likelihood of survival during the early phase of the recent global financial crisis in Eastern Europe and Central Asia, a region that was especially hard hit. The first data source provides information on the reported severity of financial constraints for 360 firms from 23 countries in 2002, 2005, and 2008. By following the same firms over time, the study summarizes both the gradual easing of financial constraints from 2002 to 2005 and their tightening during the crisis. Key findings are that financial constraints during the crisis were less severe in countries with well-established foreign banks (entered prior to year 2000), and that changes in the severity of financial constraints were more pronounced for large firms than others during the crisis (although large firms continued to have less severe constraints on average). The second data source provides information on whether firms remained in operation in 2009 in six countries in Eastern Europe and Central Asia. Controlling for other relevant characteristics, firms were more likely to survive the crisis if they had access to external credit.

Bibliographic Details

Main Authors:	Clarke, George R.G., Cull, Robert, Kisunko, Gregory
Language:	English
Published:	World Bank, Washington, DC 2012-04
Subjects:	ACCESS TO BANK, ACCESS TO CREDIT, ACCESS TO EXTERNAL FINANCE, ACCESS TO FINANCE, ACCESS TO FINANCIAL SERVICES, ACCESS TO FINANCING, ADVANCED ECONOMIES, AFFILIATE, AFFILIATES, APPLICATION PROCEDURES, BANK ACCOUNT, BANK ACTIVITY, BANK ASSET, BANK CREDIT, BANK FINANCING, BANK FOR INTERNATIONAL SETTLEMENTS, BANK INTERMEDIATION, BANK LENDING, BANK LOANS, BANK OF KOREA, BANK POLICY, BANKING ASSETS, BANKING CRISIS, BANKING SECTOR, BANKING SECTOR ASSETS, BANKING SECTORS, BANKING SYSTEM, BANKRUPTCY, BARRIERS TO ENTRY, BORROWER, BORROWING, BRANCH, BRANCHES, BRIBES, BUSINESS CYCLES, BUSINESS ENVIRONMENT, CAPITAL FLOWS, CAPITAL MARKETS, CENTRAL BANK, CHECKS, COLLATERAL, COLLATERAL REQUIREMENTS, COMPETITORS, CORPORATE FINANCING, CORRUPTION, CREDIT CONSTRAINTS, CREDIT CRUNCH, CREDIT GROWTH, CREDIT MARKETS, CREDIT PROVISION, CROSS-BORDER FLOWS, CURRENCY, CURRENCY COMPOSITION, CURRENT ACCOUNT, CURRENT ACCOUNT DEFICIT, CURRENT ACCOUNT DEFICITS, DEFERRED PAYMENT, DEFICITS, DEPENDENT, DEVELOPING COUNTRIES, DOMESTIC BANK, DOMESTIC BANKS, DUMMY VARIABLE, DUMMY VARIABLES, ECONOMIC CRISIS, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC POLICY, ECONOMIES IN TRANSITION, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, EMPLOYMENT, EMPLOYMENT GROWTH, ENTERPRISE PERFORMANCE, EXCHANGE RATE, EXCHANGE RATES, EXCLUSION, EXPORTERS, EXTERNAL BORROWING, EXTERNAL CREDIT, EXTERNAL FINANCE, EXTERNAL FINANCING, EXTERNAL FUNDING, EXTERNAL FUNDS, FEDERAL RESERVE, FEDERAL RESERVE BANK, FEDERAL RESERVE BANK OF BOSTON, FEDERAL RESERVE BANK OF NEW YORK, FINANCIAL ACCESS, FINANCIAL CONSTRAINTS, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL GLOBALIZATION, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL INTEGRATION, FINANCIAL INTERMEDIATION, FINANCIAL MARKETS, FINANCIAL SERVICES, FINANCIAL SHOCK, FINANCIAL SITUATION, FINANCIAL STATEMENT, FINANCIAL STATEMENTS, FINANCIAL SUPPORT, FINANCING CONSTRAINTS, FINANCING OBSTACLES, FIRM PERFORMANCE, FIRM SIZE, FIRMS, FIXED ASSETS, FIXED EXCHANGE RATES, FIXED INVESTMENT, FLOATING EXCHANGE RATE, FLOATING EXCHANGE RATES, FOREIGN BANK, FOREIGN BANK ENTRY, FOREIGN BANK PARTICIPATION, FOREIGN BANKS, FOREIGN CLAIMS, FOREIGN OWNERSHIP, FORMAL BANKING, FORMAL BANKING SYSTEM, HOLDING, HOME MARKETS, HOST COUNTRIES, HOST COUNTRY, HOUSEHOLDS, IMMEDIATE PAYMENT, INFLATION, INFORMATIONAL ASYMMETRIES, INSOLVENCY, INSOLVENCY GROUP, INSOLVENT, INSTITUTIONAL DEVELOPMENT, INSTRUMENT, INTANGIBLE, INTANGIBLE BENEFITS, INTEREST RATES, INTERNAL FINANCE, INTERNAL FUNDS, INTERNATIONAL BANK, INTERNATIONAL BANKS, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL FLOWS, INTERNATIONAL FINANCIAL INSTITUTIONS, INTERNATIONAL LENDING, INVESTMENT CLIMATE, INVESTMENT DECISIONS, INVESTMENT OPPORTUNITIES, LARGE FIRM, LARGE FIRMS, LEGAL CONSTRAINTS, LEGAL ORIGIN, LENDER, LENDERS, LENDING POLICIES, LEVEL OF COMMITMENT, LEVERAGE, LIABILITY, LICENSING, LINE OF CREDIT, LINES OF CREDIT, LIQUIDATION, LIQUIDITY, LIQUIDITY PROBLEMS, LOAN, LOAN APPLICANTS, LOAN APPLICATION, LOAN APPLICATIONS, MANUFACTURERS, MATURITY, MEDIUM ENTERPRISES, MORTGAGE, MORTGAGE MARKET, MULTINATIONAL, MULTINATIONAL BANK, MULTINATIONAL BANKS, OBSTACLES TO GROWTH, OVERDRAFT, OVERDRAFT FACILITIES, OVERDRAFT FACILITY, OVERDRAFTS, PARTY, POSITIVE COEFFICIENT, PRIVATE BORROWERS, PRIVATE CAPITAL, PROFIT OPPORTUNITIES, PROFITABILITY, PROPERTY RIGHTS, PROTECTION OF PROPERTY, PUBLIC-PRIVATE PARTNERSHIP, RATE OF RETURN, REAL SECTOR, RETAINED EARNINGS, RETURN, RETURN ON ASSETS, RETURN ON SALES, RISKY LOANS, SALES GROWTH, SMALL BUSINESS, SMALL FIRMS, SOURCES OF FINANCE, STATE BANKS, SUBSIDIARIES, SUBSIDIARY, SUPPLIERS, SYSTEMIC CRISES, TAX, TAX ADMINISTRATION, TAX RATES, TRANSPORT, UNION, WORKING CAPITAL, WORLD FINANCIAL MARKETS,
Online Access:	http://documents.worldbank.org/curated/en/2012/04/16239357/external-finance-firm-survival-aftermath-crisis-evidence-eastern-europe-central-asia https://hdl.handle.net/10986/6053
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