Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142624
Authors: 
Fidrmuc, Jarko
Ciaian, Pavel
Kancs, d'Artis
Pokrivcak, Jan
Year of Publication: 
2011
Series/Report no.: 
EERI Research Paper Series 17/2011
Abstract: 
In light of the recent financial and economic crisis the present paper analyzes the determinants of loan default. We employ a unique firm-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 Sector-Risk Hypothesis, we find that agro-food industry does not exhibit higher default rate than other sectors. Testing the Firm-Risk Hypothesis, we find that highly indebted firms are more likely to default on their loan than other firms. Testing the EU Subsidy Hypothesis we find 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.
Subjects: 
Bank credit
loan default
credit constraints
heterogeneous firms
JEL: 
G33
G21
C25
Q14
Document Type: 
Working Paper

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