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Title:Borrowing Locally, Operating Globally? Financing and Trading Patterns of Firms during the 2007/2008 Economic Crisis PDF Logo
Authors:Neugebauer, Katja
Spies, Julia
Issue Date:2012
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2012: Neue Wege und Herausforderungen für den Arbeitsmarkt des 21. Jahrhunderts - Session: International Finance A16-V1
Abstract:The theory of relationship lending is based on the idea that close ties between borrowers and banks may be economically beneficial. Information asymmetries on the part of the bank introduce adverse selection and moral hazard problems into the lending process and may lead to lengthy decision processes and/or reduce the availability of credit for firms. The recent financial and economic crisis, which has been marked by increased uncertainty about the creditworthiness of firms, has reduced the quantity of available credit or raised its costs. Being able to resort to a main bank might reduce the problem of information asymmetries and enable firms to maintain access to credit in times of economic hardship. However, formal studies investigating the role of main banks in dampening the crisis effect on firms global operations are still missing. This paper seeks to fill this gap by explaining crisis-related trade reductions with the bank type used at the firm-level. We find some evidence that using a local bank for external financing reduces the probability of an export decline.
JEL:G20
G21
F14
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2012: Neue Wege und Herausforderungen für den Arbeitsmarkt des 21. Jh.

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