Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/175687 
Year of Publication: 
2017
Series/Report no.: 
ECB Working Paper No. 2063
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We investigate the impact of employment protection on firms' credit access by looking at both credit obtained from banks and firms' decision to apply for a loan. We find that greater flexibility in structuring the employees' working hours and in dismissing employees increases the probability that firms obtain credit and that greater flexibility in dismissing employees decreases the probability that firms are discouraged from applying for credit. However, our findings also reveal that firms perceive regulations providing flexibility with regard to the employees' working hours differently from banks, leading to a situation in which firms are more likely to be discouraged from applying for a loan, even though the probability to obtain a loan increases. Our results are robust to confounding, endogeneity, selection bias as well as to alternative specifications.
Subjects: 
Credit Access
Discouraged Borrower
Employment Protection Legislation
Labour Market
JEL: 
D22
G21
G32
J41
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-2785-7
Document Type: 
Working Paper

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